Union Budget 2013: Include E&P activities in infra sector, says D&B

Dun & Bradstreet

• Inclusion of exploration and refining activities in infrastructure sector is expected. Further, exploration and refining can be allowed a deduction for 10 consecutive assessment years against the prevailing 7 year period.
• Modification of the term “Mineral Oil” to include natural gas including gas obtained from Coal Bed Methane (CBM) so that companies engaged in the exploration and production of natural gas can avail tax holiday which is currently extended to mineral oil exploration companies. This measure would encourage oil & gas exploration companies to step up their investments in exploration and development of natural gas and CBM reserves.
• Exemption in customs duty on rigs imported by companies acting as contractors for state owned exploration firms or by a sub-contractor of such contractor provided they adhere to prescribed norms. This would help private contractors cut down their operational expenses.
• Widening of the customs duty exemption to items required for petroleum operations and those installed on-shore is expected.
• Services provided to exploration and production companies should be exempted from service tax. Also Services imported by exploration and production companies should be exempted from service tax.
• Validity of deduction under Section 80 IB (9) for refining projects is likely to be extended from 31/3/2012 to 31/3/2015 so as to cover the projects which is affected by time delays.
• Duty exemption on import of LNG / Natural made by any person as long as it is used for the generation of power.
• Swapping of natural gas if made through Ministry of Petroleum and Natural Gas as per policy measure should not attract taxes of any kind.