The Hindu Business Line : Panel against proposal to withdraw tax holiday for refineries

“Moreover, the move might also have a tendency to dissuade the reputed companies from making substantial investments in the exploration and production sector.”.

Our Bureau

New Delhi, April 23

The Standing Committee on Petroleum & Natural Gas has termed the Budget 2008-09 proposal to withdraw income-tax exemption for refineries commissioned on or after April 1, 2009 as a retrograde step and recommended its reversal.

The provision for seven year tax holiday, which is at present being enjoyed by the green field refineries and the companies producing oil and gas is sought to be discontinued as per the Budget proposal.

The Committee analysing the Petroleum Ministry’s Demands for Grants (2008-09) report tabled in the Parliament on Wednesday observed that it was unhappy to learn that certain changes have been sought to be effected in Section 80-IB of the Income Tax Act where no deduction in income tax would be allowed to an undertaking engaged in refining mineral oil if it begins refining on or after April 1, 2009.

“In the opinion of the committee, this is a retrograde step taken by the Government, which would adversely affect the refinery projects of public sector undertakings/joint ventures under implementation at Paradeep, Bina and Bhatinda which are slated to be operationlised after April 2009,” the report said.

Besides, it would also prompt these companies to rethink their plans about setting up new refineries, thereby constraining the addition to the refining capacity in the years to come, the report said.

“Moreover, the move might also have a tendency to dissuade the reputed companies from making substantial investments in the exploration and production sector,” it said.

“The committee, therefore, strongly recommend that this contentious provision/proposal should be withdrawn,” the report said.

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