NEW DELHI: The finance ministry appears to have sealed the fate of forthcomingauctions of exploration acreages. The revenue department has rejected the oil ministry's suggestion to extend the seven-year tax holiday under the New Exploration Licensing Policy to gas discoveries in the ninth bidding round.
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Revenue secretary Sunil Mitra has written to the petroleum ministry giving basically two grounds for rejection of tax holiday on gas discoveries. First, he says, the Income-Tax Act defines `mineral oil' -- which includes crude -- and `natural gas' as separate products, while the NELP policy has outlined the tax holiday for only oil finds. Second, Mitra said, the NELP policy has a profit-linked tax deduction structure. Under the circumstance, extending the tax holiday to gas finds from concessions auctioned in the ninth round would defeat the purpose behind the government's efforts to phase out to profit-linked deductions and bring in investment-linked incentives for identifed sectors.Read full article here
