Budget Impact on Oil and Gas Sector        (updated - 08 July 2009)
The finance minister made few announcements for the oil and gas sector and one of the major ones was the extension of tax holiday under Section 80 IB (9) for production of natural gas too.

The demand for deregulation of the oil sector, however, was not fulfilled. But the government set up an expert group to advise on a viable and sustainable system of pricing petroleum products.

The announcements made in the budget are marginally positive for the sector in spite of major expectations remaining unfulfilled.

Budget Impact on Oil and Gas Sector               

Slew of initiatives for the oil and gas sector have been proposed in the budget. These include:
·  The government shall set up an expert group to advise on a viable and sustainable system of pricing
   petroleum products.
·  Tax holiday under section 80-IB(9) of the Income Tax Act, which was hitherto available in respect of
   profits arising from the commercial production or refining of mineral oil, to be extended to natural gas.
   This tax benefit to be available to undertakings in respect of profits derived from the commercial production
   of mineral oil and natural gas from oil and gas blocks which are awarded under the NELP-VIII round of
   bidding. The section to be retrospectively amended to provide that "undertaking" for the purposes of section
   80-IB(9) will mean all blocks awarded in any single contract.
·  The government shall prepare a blueprint to be developed for long distance gas pipelines leading to a
   National Gas Grid to facilitate transportation of gas across the length and breadth of the country.
·  The outlay for Assam Gas Cracker Project stepped up suitably in B.E. 2009-10.
·  Excise duty on naphtha to be reduced to 14%.
·  Duty paid High Speed Diesel blended with upto 20% bio-diesel to be fully exempted from excise duties.
·  The ad valorem component of excise duty of 6% on petrol intended for sale with a brand name to be
   converted into a specific rate. Consequently, such petrol would now attract total excise duty of Rs.14.50
   per litre instead of '6% + Rs.13 per litre'.
·  The ad valorem component of excise duty of 6% on diesel intended for sale with a brand name to be
   converted into a specific rate. Consequently, such diesel would now attract total excise duty of Rs.4.75
   per litre instead of '6% + Rs.3.25 per litre'.
·  Customs duty on bio-diesel to be reduced from 7.5% to 2.5%

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