BS reported that petroleum ministry has asked for a two year extension of the tax holiday for refineries under the Income Tax Act so that state owned Indian Oil Corp's much delayed, INR 29,777 crore Paradip refinery can avail the benefit.

A tax holiday is currently available to units that are commissioned by March 31st 2012, under section 80IB(9) of the I-T Act (exemption from payment of tax on income earned from refining).

IOC's 15 million tonne a year Paradip refinery is running behind schedule because of several problems the company has faced in executing the mammoth project in Orissa.

Officials said that the biggest of these were law and order problems and issues related to land acquisition, which have delayed the project commissioning to September 2013, from the previous schedule of the first quarter of 2012.

Officials said owing to issues beyond its control, IOC had asked the Oil Ministry to seek a two year extension of the tax holiday till March, 2014. The Oil Ministry, in turn, has written to the Finance Ministry requesting the same.

Currently, refineries commissioned after March 31, 2012, will not be eligible for exemption from payment of income tax on revenues earned in the first seven years of operations. The seven-year income tax holiday for the refining sector ends next year.

IOC plans to sell fuel produced at the Paradip unit in the domestic market, rather than export the products as was earlier planned, due to the rise in fuel demand at home.

(Sourced from BS)