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• THE ASSOCIATED Chamber of Commerce and Industry (ASSOCHAM) in its pre-budget memorandum on Friday asked finance minister, Pranab Mukherjee to extend the tax holiday for oil and gas exploration industry to 10 years from seven years at present. “The oil and gas exploration is a very capital intensive industry, with a long gestation period and is strategically important for the country, The provision of section 80- 1B (9) of the Income Tax Act should be amended to extend the tax holiday for the industry from seven to 10 years and to allow flexibility to companies involved to chose the period during initial 15 year period of operations,” said RN Dhoot, president of ASSOCHAM on Friday.

• “During the first seven years, companies have large expenditure to set up and hence the actual benefit of tax holiday does not reach them,” the president added.“Considering country’s energy requirements, the sunset clause for commencement of refining should be extended by a year to March 31, 2013” demanded the ASSOCHAM memo.“It is expected that extension of tax holiday will benefit refining companies starting operations in 2012-13 and the benefit be passed on to consumers,” said Dhoot.

• The industry chamber in its pre-budget memorandum also suggested that the expenditure for drilling and exploration activities should be treated at par with research and development expenditure, and weighted deduction of the actual expenses incurred by the assessee should be allowed.The oil and gas exploration is a capital intensive industry, with a long gestation period and is important for the country, therefore the tax holiday for the industry from seven to 10 years” RN DHOOT President, ASSOCHAMDhoot also felt that there was a need to increase depreciation rate for tax deduction under income tax to improve internal accrual for replacement of assets, as the entire world was and its financial markets were faced with fluctuating stock on markets and volatile crude oil prices.

• Removal of inverted duty structure in case of certain industries was also sought; however specific industries were not mentioned in the memo.The chamber yet again asked the finance minister to maintain the current rate of excise duty keeping in view the falling industrial growth. It also wanted simplification of tax refund procedures for exporters of goods and services and wanted these refunds to be in a ‘reasonable period of time.’“There is also need to remove double taxation of same taxable items under value added tax like in case of copyright, software, right to use goods and immovable properties, said the ASSOCHAM’s memorandum.

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