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India: Oil and gas depreciable assets; FAQs concerning income tax returns

India: Oil and gas depreciable assets

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

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  • “Farm-in” expenditures of oil exploration and production companies are “intangible assets” eligible for depreciation: The Central Board of Direct Taxes (CBDT) issued a circular clarifying that farm-in expenditures (the amounts paid for acquiring a participating interest) incurred by oil exploration and production companies are not to be treated as costs for acquiring an interest in the partnership or as an investment for acquisition of a member's interest in an association of persons or body of individuals. Rather, the circular provides that such farm-in expenditures are to be treated as amounts paid to acquire the underlying assets, and the amount paid for acquiring the participating interests, after reducing the cost components attributable to tangible assets, are to be treated as an “intangible asset” (being a business or commercial right akin to a licence) that is eligible for a claim of depreciation under section 32(1)(ii) of the Income-tax Act, 1961. Read an August 2019 report [PDF 711 KB]

  • FAQs with regard to filing tax returns for assessment year 2019-20: The CBDT issued a circular that provides a set of “frequently asked questions” (FAQs) to clarify certain filing rules relating to income tax returns for assessment year 2019-2020. The circular was issued after CBDT amended the income tax return forms and filing instructions. Read an August 2019 report [PDF 643 KB]

  • Credit for supplies when consideration not paid: The Authority for Advance Ruling, Tamil Nadu, issued a ruling addressing when a supply is to be treated as being made “without consideration.” Read an August 2019 report [PDF 489 KB]

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