Coal sector not to get infrastructure status, tax sops
26 Dec 2006
New Delhi: The finance ministry has said that the coal-mining sector was not eligible for being granted infrastructure status. The coal ministry's proposal to the finance ministry for tax concessions to mining firms, increasing the limit for raising overseas debt has also been turned down.
According to an official note issued by the coal ministry said that the finance ministry had turned down its proposal for permitting coal exploration and mining projects to tap external commercial borrowings to the extent of 50 per cent of their total cost.
Another proposal to grant 40-per cent IT exemption for profits earned by financial institutions from investment in coal exploration has also been turned down.
The coal ministry had also sought 20-per cent tax rebate for investments in shares, debentures and bonds of coal mining companies or units of mutual funds subscribing to those securities up to Rs70,000.
This proposal, as well as the request for provision of duty relief for imports of machinery and equipment too has been turned down.
The finance ministry has also not agreed to the demand for full tax exemption for the first five years for coal projects (seven years for those in the North East) under section-80 a of the Income Tax Act 1961 and concessional taxation in the next five years through a 30- per cent deduction.
The coal ministry's proposals were aimed at providing infrastructure status to the mining industry.
