The Hindu Business Line : FICCI seeks level-playing field for Indian, foreign cos in oil and gas sector

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has underlined the need for a multi-pronged fiscal agenda to ensure a level playing field for Indian and foreign companies in the oil and gas upstream sector, both in terms of the applicability of corporate income-tax and computation of deemed income, and thereby give an impetus to exploration and production.

FICCI has called for reducing the corporate income-tax rate applicable to foreign E&P (energy and power) companies to that applicable to Indian companies. In order to provide fiscal incentives to encourage active participation of Indian companies in drilling operations and to bring synergies between the direct and indirect tax regime for services to the oil and gas industry, the drilling services rendered by the Indian companies offshore India need to be recognised as `export'/ `deemed export' and profits from such activity should be eligible for benefits under the Income Tax Act.

The Chamber has pointed out that either a new Section should be introduced providing tax concessions (similar to those available under Section 80HHE of the Act) to the Indian drilling companies providing services offshore India or the benefit of Section 80HHE should be extended for a further period of 10 years with an amendment to include within its scope the drilling activities performed by the Indian companies offshore India.

Further, FICCI has suggested a following four-fold approach for the Indian industry to enjoy a level playing field on par with its foreign counterparts. The chamber has stressed the need for clarity on the actual provisions regarding the tax holidays on the availability of such holiday for commercial production of natural gas and instance of commercial production.

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