Oil & gas: Budget 2010 low on reforms, high on tax - Moneycontrol.com

Budget 2010 may not go down too well with the oil and gas sector. Finance Minister Pranab Mukherjee says the government will continue with its current practice of paying out oil subsidy in cash. The won't go well with the industry, which expected a clear subsidy-sharing mechanism of cash subsidy/oil bonds and clarity on tax breaks for natural gas produced under NELP I-VII.

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The oil and gas industry was keenly awaiting the Union Budget as it expected deregulation and an in increase in fuel and gas prices. There were hopes that some of the recommendations made by the Kirit Parikh committee would see light of the day. However, no such measures were announced in the Budget. The Finance Minister has also increased the Minimum Alternate Tax to 18% from the earlier 15%. Oil exploration and production companies had sought an exemption from MAT. At present, 15% MAT is applicable on booked profits (16.995% effective). No exemption has been granted on profits earned from commercial production or refining of mineral oil which are otherwise fully exempted from income tax for the period of seven years from the levy of MAT.

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