Budget 2013: Natural gas producers look at govt for tax exemption

Budget 2013: Natural gas producers look for tax exemption
From the upcoming budget, the oil & gas industry expects that the government should treat natural gas on a par with crude oil for tax exemption, a step that could revive investors' interest in auction of oil blocks.

"We can only hope, but the finance ministry is adamant that the matter, which is sub judice in various IT appellate tribunals, cannot be resolved through the Finance Bill," a senior executive from an upstream company told media.

The natural gas producers have started experiencing uncertainty over tax holidays after the Finance Bill 2008-09 proposed to redefine the term 'mineral oil', which excluded natural gas producers from enjoying a 7-year tax holiday.

Later, in the Budget 2009, the then Finance Minister Pranab Mukherjee had made a one-time exception for NELP-VIII and allowed tax concession to gas production as well. However, he restricted the tax benefit to blocks awarded under that particular round.

Meanwhile, the government is not likely to entertain one of the key demands of Association of Oil Gas Operators (AOGO) to extend the tax holiday from 7 to 15 years, officials stated.

"It is unlikely that the finance minister will oblige. The country's financial situation is precarious and the finance minister is focused on fiscal consolidation," an official stated.

Read more about: union budget 2013
Story first published: Friday, February 22, 2013, 13:31 [IST]
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