NEW DELHI: Bringing to an end the uncertainty over the future of new upcoming oil refineries and giving an impetus to the New Exploration Licensing Policy (NELP) Seventh Round, Union Finance Minister P. Chidambaram on Tuesday extended seven-year income-tax holiday for refineries starting operations by March 31, 2012. However, he did not clarify whether the same tax breaks would be available for oil and gas exploration and production.
Replying to the debate on the Finance Bill in the Lok Sabha, Mr. Chidambaram introduced an amendment to the Finance Bill stating the tax holiday would be available to refineries that begin operations on or before March 31, 2012.
Earlier, in the Budget, he had intended to end the tax break for units beginning operations after April 1, 2009.
The refineries that would benefit from the new concession are: Bina refinery of BPCL, IOC’s Paradeep refinery and HPCL-Mittal combine’s Bhatinda refinery. “This is a genuine concern. With a view to ensuring that benefit to these three refineries are not denied the benefit on account of their inability to adhere to the 2009 deadline, it is proposed to amend the proposal to provide that such refineries will be eligible to avail of the benefit if they begin refining not later than March 31, 2012,”’ he said.
On tax breaks for oil and gas production under Sec. 80(IB) (9) of the Income-tax Act, he said no new change had been brought about in the section except for sunset clause for refineries.