The Hindu Business Line : Assocham plans ‘flow-through-shares’ scheme for mining

New Delhi, Oct. 6 With a view to make investments in exploration companies more attractive and also help private exploration companies to gain investors, industry chamber Assocham has proposed introduction of ‘flow-through-shares’ instrument, which allows the transfer of tax deductions from exploration companies to their individual investors.

The instrument currently being used in Canada has been recommended to improve fiscal regime for exploration through tax regime that would allow flexibility in expenses deduction and attract the international investors.

There is a restriction of four years up to which the company can carry forward its exploration expenses and, therefore, needs to be urgently expanded to enable the company to deduct these expenses after the commencement of mining operations.

New scheme

The ‘flow-through share’ scheme recommended to the Government by the chamber allows the transfer of tax deductions from exploration companies to their individual investors. The exploration companies accumulate losses as they fund the continued exploration. These accumulated losses are reflected on their balance sheets until they can be offset against the future revenues.

However, given the significant time lag between the commencement of exploration and the discovery of mineral deposits, investors in such exploration companies must wait a long time before they can expect any return on their investment. This is a significant disincentive to invest in such companies.

Allowing the transfer of tax deductions of exploration companies to their individual investors, losses can be transferred to individual investors as and when they accumulate. These investors can then offset them against their other income. This makes investment in exploration companies more attractive and easier for such companies to access the capital that is necessary to undertake such exploration.

More Stories on : Mining & Quarrying | Industry Associations

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
‘India to become 70% self-reliant with defence buys’

Unemployment may be rooted out by 2008: Rangarajan

Renewable energy SEZ’s initial cost at Rs 20,000 cr

TN to beef up infrastructure projects to boost tourism

Decision on oil bonds for downstream industry soon

Differing perceptions in steel stock investments

Govt likely to appoint two addl solicitor-generals

Real-estate pre-launches come under Ministry scrutiny

Assocham plans ‘flow-through-shares’ scheme for mining

Centre launches national investment fund

FDI policy review for Cabinet

Co-op credit: ‘Implement Vaidyanathan report early’

Spandana plans to raise Rs 400 cr in next 6 months

Exporters get more sops on service tax, credit

‘Hike in DEPB rates not the solution to rupee problem’

Kamal Nath says exporters need more relief

GVK Bio looking at deal with private equity players