The Ordinance, signed by President APJ Abdul Kalam, mandated that any payment received by a foreign government or a foreign airline from an Indian carrier, according to any agreement signed during the current fiscal, would be exempt from income tax.
With the exemption on withholding tax for aircraft leasing charges being made available, Indian carriers are expected to save Rs 200 crore (Rs 2 billion) over the next one year.
Finance Minister P Chidambaram had announced the exemption for aircraft leasing charges in the Budget in July last year.
The exemption was, however, available till September 30 this year and the Ordinance addresses legal changes that are required to make the benefits available for a longer duration.
An official statement said Ratnagiri Gas & Power would be eligible for Section 80-IA benefits under the Income Tax Act.
The Ordinance specified that the benefit would be available to companies in which majority stakes were held by public sector companies and which are formed for reviving and reconstructing electricity generating plants before November 30.
To avail of the benefit, Ratnagiri Gas & Power has to commence the sale of electricity from Dabhol by the end of March 2007.
Officials said customs and sales tax benefits were also proposed to be made available to Ratnagiri Gas & Power over the next few days.
The Ordinance does away with fringe benefit tax for political parties, not-for-profit companies (under Section 25 of the Companies Act) and charitable trusts (under Section 12AA of the Income Tax Act). It also provides Banking Cash Transaction Tax exemption for inter-bank transactions.
Besides, the Ordinance provides tax exemption for specified persons on income from multi-nation international sporting events conducted in India, approved and regulated by a recognised international body.
The move is aimed at providing exemption on income from International Cricket Council's Champions Trophy to be organised in India next year.
ICC had threatened to shift the event to another country in case tax exemption was not made available. The provision was part of the Taxation Laws Amendment Bill introduced in Parliament this year.
The Bill has not received Parliamentary assent so far.