Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: ACCOUNTING STANDARD :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: due date for vat payment :: VAT RATES :: TDS :: Central Excise rule to resale the machines to a new company :: form 3cd :: cpt
 
 
« News Headlines »
 Did you know? The tax exemption on your HRA
 Income Tax Department expands list of deposits, transactions under scrutiny
  Income-tax Act, 1961 read with Rule 114E of Income-tax Rules, 1962
 Master Directions on Access Criteria for Payment Systems
 RBI-Scheduled Bank's Statement of Position in India as on Friday, January 06, 2017 (Revised)
 3 Big Mistakes To Avoid This Tax Season
 The Top 5 Tax Stories Of 2017
 Are multiple service tax rates in the offing?
 All you need to know about claiming tax break on HRA
 How much income tax you should pay on investments in gold?
  Best ways to save tax in 2017

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 2017 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