Section 527
Section 527: power to grant tax exemption for mineral oil businesses
Section 527 gives the Central Government a specific, narrow power to modify how income tax applies to specified persons involved in prospecting for, or extracting, mineral oils - reflecting the unique, often foreign-partnership-structured nature of oil and gas exploration contracts in India.
What the section allows
If the Central Government is satisfied it is necessary or expedient in the public interest, it may, by notification, grant an exemption, a reduction in rate, or another modification of income-tax for a specified class of persons - or in relation to the whole or part of the income of that class, or the status in which they (or their members) are assessed - concerning their income from the mineral oil prospecting/extraction business referred to in sub-section (2), effective from the tax year beginning on or after 1 April 1992.
Who this can apply to
The persons covered are those specified by the Central Government in relation to this business - typically parties to production-sharing contracts or similar arrangements with the Government of India for exploring and extracting mineral oil resources, where special tax treatment may be agreed as part of the underlying contractual/policy framework.
Frequently asked questions
Who can benefit from a Section 527 exemption?
Only persons specifically notified by the Central Government as being engaged in the business of prospecting for, or extraction/production of, mineral oils, as specified under sub-section (2).
Does this apply automatically to any oil and gas company?
No - it requires a specific Central Government notification naming the class of persons and the exemption/modification granted; it isn't a general, automatically-available exemption.
From when can this exemption apply?
Any notification under this section takes effect from the tax year beginning on or after 1 April 1992, per the section's own text.
Related sections
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