The Hindu Business Line : Gas transportation cos seek infrastructure status

CLIMBING on the pre-budget bandwagon for tax breaks, companies in the gas transportation and distribution sector want their projects to be treated as `infrastructure facility' to merit tax concessions such as 10-year tax holiday.

Industry sources said that the move would facilitate the development of a comprehensive network of gas pipelines and create a conducive investment climate. In particular, these companies want their projects to be categorised as `infrastructure facility' with an eye on Sections 80-IA and 10 (23G) of the Income Tax Act.

While Section 80-IA accords 10-year tax holiday, Section 10 (23G) fully exempts any income through dividends, interest or long-term capital gains of an infrastructure capital company from investments by way of shares or long-term finance in any enterprise that is wholly engaged in developing, maintaining and operating any infrastructure facility.

Moreover, there is also a demand to exempt domestic infrastructure companies from payment of dividend distribution tax and minimum alternate tax (MAT) on profits of exploration and production (E&P) activities.

Companies in the gas transportation sector have in their submission to the Finance Ministry noted that any industrial undertaking engaged in building, owning and operating a pipeline facility in the petroleum or the gas transportation sector is currently not considered an infrastructure facility.

They have pointed out that similar sectors such as power transmission, water facilities, waste management system, ports and inland waterways are deemed `infrastructure facility'.

"As a logical extension, we are saying that gas transportation and distribution projects too must be covered with the definition of `infrastructure facility' for Section 80-IA," an industry official said. A similar argument has been made for exemption under Section 10 (23G).

"The benefits envisaged under Section 10 (23G) can be meaningful when concurrent change is brought about in Section 115 O. Dividend income under Section 10 (23G) are exempt only when declared by a foreign company," the official added.