The Finance Bill 2008 has been amended to extend tax holiday to public sector refineries starting operations before March 31, 2012. Accordingly, refineries at Bina, Bhatinda and Paradip are expected to benefit from this move. These three greenfield refineries are coming up in Madhya Pradesh, Punjab and Orissa, and are being set up by Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Indian Oil Corporation Ltd, respectively.
Interestingly, the government is yet to decide on the tax holiday for oil exploration companies, particularly in the wake of the ongoing seventh round of bidding under the New Exploration & Licensing Policy It may be recalled that income tax benefits available under Section 80 IB(9) were withdrawn in Budget 2008-09. This adversely impacted investor interest since these benefits were in place when NELP-VII was launched in December last year. The last date for submission of NELP-VII bids has been extended to May 16, with a possibility of a resolution of the tax-related issue in the coming weeks.