Government is likely to postpone the last date of bidding for the 57 oil and gas blocks on offer for under the seventh round of New Exploration Licensing Policy by two weeks to May 9 to facilitate a clarification on tax breaks for the exploration and production sector.
The last date for bidding is being pushed back from April 25 to May 9 to allow Finance Minister P Chidambaram to clear the air on the seven-year income tax holiday for oil and gas production, when he replies to Finance Bill in Parliament in next couple of week, officials said.
"There is no formal decision yet, but this is the line of thinking and an announcement is likely soon," an official said.
Chidambaram in his Budget for 2008-09 had announced end of income tax holidays for refineries commissioning after April 1, 2009. Alongside, it also mentioned that tax breaks under section 80-IB(9) would be available for production of 'mineral oil', which was defined as not to include petroleum and natural gas.
This created a lot of confusion among the investors and a fear of poor response took Petroleum Minister Murli Deora to Chidambaram earlier this week. Finance minister is believed to have assured Deora that tax break for oil and gas production would be restored as it was a sovereign commitment to companies investing in the nascent sector.
Excluding petroleum (oil) and natural gas from the ambit of mineral oil would leave only water for availing tax breaks.
Besides, it was also pointed out that oil and gas cannot be looked at separately due to the fact that they occur together.
