| According to Finance Bill, 2008, the finance ministry has said that the term mineral oil does not include petroleum gas. |
| "Mineral oil does not include gas under Section 80-IB(9). When tax exemptions were first given under this Section, the gas business was not there," said a government official. These tax incentives to oil refineries were in vogue since the 1960s. |
| "Whether gas was covered or not was not clear. The petroleum ministry said mineral oil includes gas and other items. Our intention under the Act was to include only oil refineries," the official said, adding that this key bit had been clarified now. |
| Many oil and gas producing companies have taken advantage of the scheme. After the ministry realised that gas has become a big money-spinner for a number of companies, the ministry thought about issuing a clarification that mineral oil does not include gas. |
| As a consequence of the clarification that mineral oil for the purposes of Section 80-IB(9) does not include gas, Reliance Industries will not get the seven-year tax holiday it is counting on for its biggest gas find at D6 block in the Krishna-Godavari basin and other areas. |
| The production-sharing contracts signed by the operators of oil and gas fields with the government under the New Exploration and Licensing Policy (NELP) give a tax holiday to all production of oil or gas for seven years from the day of the start of production. |
| "This is not sustainable. It has to go," said a senior RIL executive. He added the present amendment went against the spirit of the NELP contracts. |
| A top ONGC official agrees. "A clause in the memorandum explaining the Finance Bill cannot be considered as a law. Under law, both oil and gas production are eligible for tax holiday," he said. |
| Another major clarification was that the finance ministry had put a sunset clause saying the tax holiday to mineral oil would cease after March 31, 2009. |
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