Budget 2013: Petroleum industry seeks re-introduction of tax holiday for refinery projects
The petroleum industry is looking for a re-introduction of the tax holiday for refinery projects in the Union Budget 2013.
NEW DELHI: The petroleum industry is looking for a re-introduction of the tax holiday for refinery projects in the Union Budget 2013.
At a time when domestic consumption is growing at a high rate of 4%-6% annually, there is a case for more refineries and this tax-break will be crucial in ensuring their viability.
Similarly, the industry has long been demanding a level playing field for natural gas producers by extending the 7 year tax holiday for crude oil producers. Reduction in duties on LNG and natural gas transported through the country is also a key demand.
The uncertainty over tax holidays for natural gas producers began after the Finance Bill 2008-09 proposed to redefine the term 'mineral oil'. It said the term did not include natural gas for the purpose of enjoying a seven-year tax holiday. Consequently, while crude oil producers avail of the tax benefit, the same is not available to gas producers.
The oil and gas industry is hopeful that the budget may treat natural gas on a par with crude oil for tax exemption, which could revive investors' interest in future auction of oil blocks, but it does not see any strong commitment from the government on this matter.
The oil and gas sector, which has faced acute policy paralysis in last two years, is expecting Finance Minister P Chidambaram to help in bailing out the industry.
In its pre-budget 2013 memorandum, Federation of Indian Chambers of Commerce and Industry ( FICCI) has recommended extending the tax holiday for power plants for another five years.