sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« News Headlines »
 What to do when you receive a notice from the tax department
 How to use your Form 16
 Which ITR form applies to you for financial year 2017-18?
 Income tax returns filing form-2 released; should you use it? Find out
  Are you planning to file ITR 1 form? here's how to do it Income Tax Return (ITR) filing
 30 LPA-Opening Financial Controller
 ITR form 2 in java release by CBDT for return filing by individuals
 How to file your income tax return using ITR Form-1 Income Tax efiling for AY 2018-19
 Income tax returns (ITR) filing: Have you received I-T dept notice? Safeguard yourself; here is how
 Delayed release of electronic ITR forms may compel CBDT to extend the filing deadline
 Trading volume linked to tax return?

Tax incentives unwarranted further
June, 12th 2009

There's needless controversy over tax liability in the upstream hydrocarbon sector, specifically relating to natural gas production. The extant fiscal regime as per the new exploration licensing policy does provide generous tax benefits to shore up investment in the high-risk exploration and production (E&P) segment. The issue now is whether a further tax incentive is warranted, so as to make corporate income from gas production tax exempt. Note that the budget last year did provide for a tax holiday on crude oil production.

Extending the tax exemption to gas would be logical, its argued. But two wrongs do not make a right. Theres simply no case for corporate tax exemption for gas production. Gas prices for the new hydrocarbon finds in the Krishna-Godavari basin are now market-determined, and theres no reason why income tax liability ought to be absolved. Theres also a sound case for phasing out the income tax holiday on oil production.

Whats surely required is a reasonable tax structure across the board in the oil & gas sector. Instead, we have perversely opted for generous tax holidays for oil refining, which is now proposed to be extended to hydrocarbon production.

We clearly need to rationalise both direct and indirect taxes in petroleum. The move to provide income tax holiday for gas production needs to be nipped in the bud. Anyway, the attendant provisions in the licensing policy do provide for tax deductions of E&P expenses and costs, which are as per global best practices. The budget last year did extend the tax holiday for oil refineries up to 2012, but we need to do away with such give-aways.

It makes no sense to prop up capital-intensive refineries with huge tax benefits. In the nineties, capital goods imports for refineries were also made duty free. As for petro-products, indirect taxes can add up to half the retail price which is perverse incentive to adulterate fuel. Thankfully, the indirect levies were reduced last year on an ad-hoc basis given the sharp spurt in global crude prices. We do need to firm up a rational tax policy in oil & gas without further delay.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions