New Delhi: Hydrocarbon exploration companies may be given more time to commercialise their finds with the government looking at a new policy to augment the country’s flagging domestic oil and gas production, official sources said on Wednesday. They said that a proposal is being considered by the oil ministry that may allow oil companies get tax incentives like a tax holiday scheme even if there is a delay in bringing an exploration block to production.
The move will benefit companies such as state-run ONGC and private players Reliance, Cairn Oil and Gas and Nayara Energy who have participated in the auction of various oil and gas blocks by the government but are yet to commercialise several of their finds. It is expected that the announcement on extending the tax holiday sunset given under section 80-IB of the Income Tax Act may be made in the upcoming Budget as the government wants to give a signal to investors that it remains committed to the cause of boosting domestic oil and gas production.
The Finance Act, 2011, withdrew the tax holiday for production from blocks which were awarded under contracts licensed after March 31, 2011. Later, the Finance Act, 2016, introduced a sunset clause which provided that no tax holiday would be available if commercial production of oil is started after March 31, 2017. The previous NDA government had set a target of reducing India’s import dependence on oil. (IANS)