The Hindu : Business : Infrastructure status denied for coal sector

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Wednesday, Dec 27, 2006
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Infrastructure status denied for coal sector

Special Correspondent

NEW DELHI: The Union Finance Ministry has rejected the status of the `infrastructure industry' to the coal-mining sector, while turning down the Coal Ministry's proposal seeking tax incentives for mining companies.

According to a Coal Ministry note, the Finance Ministry disfavoured its proposal for allowing coal exploration and mining companies to tap the external commercial borrowing (ECB) market to the extent of 50 per cent of their total project cost.

Likewise, the Finance Ministry has rejected another proposal which sought the grant of income-tax exemption up to 40 per cent of the profits raked in by financial institutions by way of investment in coal exploration, the note said.

In fact, the Finance Ministry, according to the note, rejected all the recommendations which formed part of the Coal Ministry's package for the grant of the "infrastructure status" to the mining sector.

For instance, the Ministry not only refused to extend duty relief on the import of machinery and equipment for the coal industry but also rejected the proposal to grant full tax exemption for the first five years for coal projects under Sec. 80A of the Income-tax Act 1961 and exemption from capital gains tax in the case of capital assets being invested in securities of companies engaged in coal mining for three years.

According to the note, the Coal Ministry is likely to submit its proposals to the Finance Ministry yet again for reconsideration.

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