Govt should scrap windfall profit tax on domestic crude oil: FICCI read full article at

The federal government ought to scrap the windfall revenue on domestically produced crude oil because the levy is adversely impacting the capex-intensive exploration of oil and fuel, the business mentioned in its suggestion for the forthcoming annual price range.

India first imposed windfall revenue taxes on July 1, becoming a member of a rising variety of nations that tremendous regular earnings of power firms. At the moment, a Rs 23,250 per tonne (USD 40 per barrel) windfall revenue on home crude manufacturing was levied.

The brand new tax, which was additionally slapped on the export of petrol, diesel and ATF, is calibrated each fortnight in keeping with worldwide oil costs.

Business chamber in its suggestions for the Finances, mentioned such levy is along with all different present levies.

“It is recommended that the Special Additional Excise Duty (SAED) on petroleum crude should be removed or if there is a need to continue the levy for some time as an extraordinary measure then the rate be changed to an ad-valorem levy of 20 per cent of incremental crude price over USD 100,” it mentioned.

The windfall tax, it mentioned, was over and above the heavy burden of royalty (20 per cent of oil worth for onshore fields and 10 per cent for offshore areas) and oil business improvement (OID) cess (20 per cent of oil worth).

“Further, the levy (windfall tax) is calculated on per tonne of production rather than as a percentage of the realized price, thereby causing hardship to oil producers when the prices get reduced,” it mentioned. “The levy has an adverse impact on exploration and development of capex proposals.”

Sunil Duggal, Group CEO, Vedanta Ltd mentioned presently, home crude oil producers are taxed practically 70 per cent and a tax construction of 35-40 per cent abiding by international requirements will encourage vital investments within the sector.

“The budget is a good opportunity to rethink provisions and revise existing policies towards ensuring the country’s energy security,” he mentioned.

Manish Maheshwari, Chairman, Invenire Power mentioned the reforms ushered in by the Authorities in current occasions are wealthy in intent and related in context, on condition that India could also be quick on home manufacturing however definitely the oil and fuel reserves held within the rocks listed below are bountiful.

“We do expect the Union Budget FY24 to address a few niggling issues that will give further impetus to the domestic oil and gas sector,” he mentioned.

The federal government, he mentioned, ought to carry crude oil and pure fuel into the ambit of GST.

“This will allow oil and gas companies to benefit from the crucial cross-utilization of input tax credit as introduced by the GST regime. This is particularly critical since capital goods used for the production of hydrocarbons come under GST,” he mentioned. Additionally, the price range ought to present readability on exemption of SAED on manufacturing of crude oil.

“The Government has exempted ‘persons’ whose annual production is less than 2 million barrels from windfall tax. However, defining the base year as FY 21-22 for this threshold of 2 million barrels and exemption on incremental production above the threshold would remove ambiguity for the entities willing to invest capital and introduce technology for enhancing domestic oil production,” he mentioned.

Power safety is pivotal for the nation and these measures within the Finances would supply an important alternative for the upstream business to ship.

Pankaj Kalra, CEO, Essar Oil & Fuel Exploration and Manufacturing Ltd (EOGEPL), mentioned because the nation ramps up its efforts in direction of a gas-based economic system, the upcoming Union Finances ought to proceed to concentrate on enabling coverage framework and measures for the oil and fuel sector.

“Natural gas, crude oil and other petroleum products are currently outside the GST ambit and there is a long-standing demand that these be brought under the GST regime,” he mentioned including a discount in GST charges for regasification of LNG also needs to be thought of given the excessive prevailing worth of LNG.

The federal government should contemplate making essential coverage reforms to help the power sector and safeguard the nation from the risky international crude markets,” he added.

(Solely the headline and movie of this report could have been reworked by the Enterprise Commonplace employees; the remainder of the content material is auto-generated from a syndicated feed.)

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