The government will set up an expert group to advice on a viable and sustainable system of pricing petroleum products, finance minister Pranab Mukherjee said in his Budget speech. He also proposed an extension of income tax holiday to natural gas projects under section 80-IB (9) of the Income Tax Act, which was hitherto available on profits from commercial production or refining mineral oil.

"It is important to recognise that with almost three quarters of our oil consumption met through imports, domestic prices of petrol and diesel have to be broadly in sync with global prices of these items," he said.

Presenting Budget 2009-10 in the Lok Sabha, Mukerjee said details about this expert group would be announced by the minister of petroleum and natural gas.

Mukherjee said this tax benefit will be available to undertakings in respect of profits derived from the commercial production of mineral oil and natural gas from oil and gas blocks which are awarded under the New Exploration Licensing Policy-VIII round of bidding.

He also proposed to retrospectively amend the provisions of said sections to provide that "undertaking" for the purposes of section 80-IB (9) will mean all blocks awarded in any single contract.