The government on Tuesday informed the Rajya Sabha that it has allowed companies to deduct all capital expenditure incurred in laying and operating cross-country natural gas, crude or petroleum oil pipeline network, for calculating income tax liability.
The government made such deductions available through inserting section 35 AD in the Income Tax Act, Minister of State for Finance S.S. Palanimanickam said in a written reply.
The minister was replying to a query if this section was inserted to give a benefit of Rs. 20,000 crore to Reliance Gas Transportation Infrastructure Ltd.
Such deductions are also available for those involved in setting up and operating a cold chain and warehousing facility for storage of agriculture produce, Mr. Palanimanickam said.
The section allows these undertakings to claim the entire capital as deduction in the year in which it is incurred, against the earlier provision in which deduction is permitted as depreciation in subsequent years.
This only results in postponement of tax liability.
To a query as to how the government proposes to bridge the huge revenue loss due to this amendment, he said the amendments through annual Finance Bills also contain steps to enhance or augment revenue collection, besides provisions for tax benefits though there is no co-relation between the two.
“The government has undertaken additional revenue generating steps such as increase in the prescribed rate of Minimum Alternate Tax in the Income Tax Act from April, 2010.”
