As the countdown to the Budget 2009 begins, it is vital that the Government revisits the extant policies and the fiscal framework in order for it to boost long-term investments and energy security of the country, says Gokul Chaudhri, Partner and Leader of the Energy and Infrastructure Practice at BMR Advisors in an interaction with Business Line.
Excerpts from the interview.
Boosting domestic exploration and production (E&P) activities on accelerated pace is high on the agenda of the new Government.
On tax holiday
For investors to fully take advantage of the tax benefits there is a need to extend the income-tax holiday period for the E&P sector from seven-year time frame to ten consecutive years. E&P companies should be exempted from paying MAT during the tax holiday period.
On the indirect tax issues
The Government should enable natural gas to have a uniform sales tax / VAT across states.
On refining capacity
India has to gradually increase its refining capacity to meet the domestic requirements. Budget 2008 removed tax holiday to refiners commencing operations after April 1, 2009. Such a move should be abolished in this budget.
On oil pricing
Last year witnessed a surge in international oil prices, leading to the bleeding of the financials of the national oil companies. It is hoped that in this Budget the Government will spell out a clear policy for the full deregulation of prices, and target subsidy only for the vulnerable section to assure access to essential fuels.
Source: The Hindu