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Wednesday, Jan 18, 2006


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`Effluent treatment plants to qualify as `infrastructure facility'

K.R. Srivats

New Delhi , Jan. 17

POLLUTION control has got a leg up. The Central Board of Direct Taxes (CBDT) has held that effluent treatment and its carriage system would qualify as `infrastructure facility' for the purpose of tax breaks under Section 80-IA of the income-tax law.

Companies that generate and discharge effluents can get 100 per cent deduction of profits and gains derived by them if they invest in effluent treatment plants and the pipeline system for carrying them to the disposal point that has been specified by regulatory agencies such as the pollution control boards (PCBs).

The tax break under Section 80-IA is available for creating, operating and maintenance of such "infrastructure facility'' and the CBDT has now accepted that effluent treatment plants and the connecting pipeline system would be considered an infrastructure facility.

The enterprises that may benefit from such a stance are basically those that are involved in chemical, textiles, leather and petrochemical industries.

The CBDT decision comes in the wake of representations made to the tax department seeking clarification as to whether such plants could be treated as an `infrastructure facility' for the purpose of tax benefit under Section 80-IA or not. This tax benefit is however available only when certain conditions are fulfilled.

The deduction is available for any 10 consecutive assessment years out of a block of 20 assessment years beginning from the year in which the enterprise develops and begins to operate any infrastructure facility.

However, in the case of an infrastructure facility being a port, airport, inland waterway or inland port, the deduction is available for any 10 consecutive assessment years out of a block of 15 assessment years.

A number of effluent treatment and pipeline transportation systems have been set up in the country in the wake of the norms prescribed by the PCBs for treatment and carriage of effluents to a safe disposal point.

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