Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited (ISPRL) [Section 10(48C)]

Indian Strategic Petroleum Reserves Limited (ISPRL) plays a crucial role in ensuring the energy security of India. It is a special purpose vehicle (SPV) created by the Government of India to store crude oil as a strategic reserve to meet any emergency requirements. To encourage and support the functioning of ISPRL, the Income Tax Act provides an exemption in respect of certain income earned by ISPRL under Section 10(48C).

Section 10(48C) of the Income Tax Act states that any income of ISPRL, derived from the storage of crude oil in strategic petroleum reserves, shall be exempt from income tax. This exemption is applicable for a period of 15 years from the financial year 2017-18 onwards.

The purpose of this exemption is to incentivize ISPRL to continue its operations and maintain adequate reserves of crude oil to safeguard the energy security of the nation. By providing this tax exemption, the government aims to ensure that ISPRL can operate efficiently and effectively without the burden of income tax.

It is important to note that this exemption is specific to ISPRL and does not apply to any other entity or organization involved in the storage or trading of crude oil. Only ISPRL, being the designated strategic petroleum reserves entity, is eligible for this tax benefit.

IncomeS eligible for Exemption :

The following income of ISPRL is eligible for exemption under Section 10(48C):

• Income from the storage and sale of crude oil in India.
• Income from the investment of funds in securities of the Government of India or a State Government.
• Income from any other source, as may be notified by the Central Government in the Official Gazette.
• Income from the sale of crude oil stored in underground strategic reserves;
• Income from the lease of underground strategic reserves for the storage of crude oil;
• Income from the provision of services related to the storage and transportation of crude oil; and
• Income from the investment of the proceeds from the sale of crude oil or from the lease of underground strategic reserves.

Conditions for Exemption :

• The exemption is subject to the following conditions:
• The income must be derived from the activities of ISPRL as a strategic petroleum reserve company.
• The income must be used for the purpose of meeting the strategic petroleum reserve requirements of India.
• The income must not be used for any other purpose, other than the purpose of meeting the strategic petroleum reserve requirements of India.
• The ISPRL must be a wholly-owned company of the Government of India.
• The ISPRL must be engaged in the storage and sale of crude oil for the purpose of maintaining strategic petroleum reserves.
• The ISPRL must obtain a certificate from the Central Government to the effect that it is fulfilling the conditions for availing the exemption.

Benefits of the exemption

The exemption provided to the ISPRL under Section 10(48C) has the following benefits:

• It reduces the cost of operating strategic oil reserves, which makes it more viable for the ISPRL to invest in this sector.
• It encourages the ISPRL to expand its storage capacity, which helps to improve India’s energy security.
• It helps to keep the price of crude oil and petroleum products in India under control.