Concessions offered to specific sectors

Oil Companies

The taxable income of all oil companies which are engaged in petroleum exploration and production is taxed favourably and the following expenses/allowances are deductible:

• Infructuous or abortive exploration expenses incurred in areas surrendered prior to the commencement of commercial production.
• All expenses incurred for drilling or exploration activities, whether before or after commencement of commercial production, including the cost of physical assets used. These are deductible after the commercial production.

The allowances are calculated according to the agreement reached between the oil company and the Government.

Non resident oil companies engaged in petroleum exploration and production are taxed at 50 per cent, as opposed to 55 per cent in the case of other foreign companies.

Oil and Gas Services

All revenues of non-resident oil service companies (excluding royalties and technical service fees), earned in connection with providing services and facilities (e.g. hire of plant and machinery) to be used in extraction or production of mineral oils, are taxed at a deemed profit of 10 per cent of gross revenues.

Shipping Operations

The income of a non-resident carrying out shipping operations in India is deemed to be 7.5 per cent of the freight revenues earned in India.

Power Projects

Foreign companies engaged in constructing, erecting, testing or commissioning of plant and machinery for turnkey power projects approved by the Government and financed by an international aid programme are taxed on a deemed profit of 10 per cent of gross revenues.

Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.