The government is likely to extend a 10-year tax holiday meant for infrastructure projects to the Delhi and Mumbai airports modernisation projects and upgrading of port terminals.
So far, the tax holiday has been applicable to greenfield airport projects but has not been used for modernisation.
"Since the amount of investment for modernising airports and port terminals will be huge, the government may find it appropriate to extend the tax holiday," sources close to the development said.
Greenfield airports, ports, inland ports, industrial parks and power projects can avail of a 10-year tax holiday during the initial 15 years since inception.
"Apart from rationalising the tax holiday policy, such a decision also fits into the common minimum programme of the United Progressive Alliance government," the sources said.
The government has awarded the contract for modernising the Delhi airport to the GMR-Fraport consortium and the Mumbai airport to the GVK group. Both are currently uncertain of the applicability of tax holiday to the airport modernisation projects.
The GMR-Fraport consortium had emerged the second highest bidder in the financial evaluation for the Delhi airport, but was the only one to qualify on technical parameters.
It accepted the option given to match the highest financial bid of Reliance-ASA offering to share 46 per cent of revenue with the government.
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