Downstream tax breaks for refiners if Sinha accepts

Vol 5, PW 26 (27 Feb 02) People & Policy

SHASTRI BHAWAN HAS also drawn up a budget 'Wish List' for the downstream sector.

It includes full exemption from customs duty on imports for new refinery projects, and for refinery expansions or upgrades. A similar concession is also suggested for imports of facilities to supply cleaner fuel, which today have 5% customs duty and 16% countervailing duty.

Other suggestions include income tax benefits for environmental protection projects by refiners. Many Indian refiners, for example, have installed systems to reduce diesel sulphur content, but more investments are needed to meet stringent quality standards ordered by the Supreme Court.

These projects increase costs, but there is no corresponding increase in revenue. Which is why, we are told, tax breaks are a must to reduce the financial burden.

There's more. Oil companies putting up new refineries or terminals also lay roads, bridges, electrical lines.

But these companies do not own such facilities. Shastri Bhawan wants companies to be allowed to deduct such expenses from their taxable income.

Petrol laced with ethanol (produced from sugarcane molasses) is oil minister Ram Naik's pet obsession for the budget. Naik has written a separate letter to Sinha asking for budget incentives to boost the usage of 'gasohol'.

"Doping of ethanol in petrol would result in increase in sugarcane crop production and industrial activity," Naik writes to Sinha.

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