The domestic oil and gas industry is waiting anxiously as the Budget day comes closer. The industry?s wish list is quite long. Facing an unusually high fiscal deficit, finance minister Pranab Mukherjee may have his job cut out. However, companies have not given up hope.

?A clarification should be provided about petroleum subsidy sharing that it is a trade discount and profit sharing. This ambiguity often leads to confusion about our direct and indirect tax liabilities,? says RK Goel, GAIL India?s director (finance).

He also said that the corporate tax rate should be aligned with individual tax rate of 30% by removing cess and surcharges.

GAIL is the country?s largest gas transporter and marketer. Two years ago, the government had extended the benefits of infrastructure status to the gas pipeline under the section 80-IA. But in the last Budget, these were replaced with investment-linked incentives available under section 25 AD.

?Infrastructure benefits, which are linked with profits, should be restored.? Goel said.

He also said that the 5% customs duty on LNG imports should be removed. This would help bring down the cost of imported LNG and encourage its usage in India.

Increased LNG import would in turn promote the development of the associated infrastructure like re-gasification terminals and transportation pipeline, leading to further optimization of LNG cost for consumers.

He further said the finance minister should put natural gas in the category of ?declared goods? so that sales tax on the clean fuel is imposed at a uniform rate by all states. This is long-standing demand of the gas industry.

While talking about the oil and gas exploration and production (E&P) business, GAIL?s director (finance) said this is a highly capital intensive and risky venture. The government should create a comfort zone for investors by providing tax exemptions for services used in exploration.

Further, rigs and other exploration equipment are very costly. So drilling expenditure should get fiscal incentives on par with the research and development (R&D) expenditure.