Tax on domestic crude in India is currently levied at the rate of 20 per cent of the value of oil. Official sources said the proposal by the Union Oil Ministry is to reduce it to 10 per cent
New Delhi: The government may give a ‘Make in India’ push to oil and gas explorers, as it is considering a proposal to almost halve cess [tax] on domestic crude oil to encourage exploration activity and allow Covid-hit oil producers to protect their margins.
The glut in the oil market and deep suppression of demand during the peak of pandemic in 2020 had pushed down crude oil prices to unprecedented levels.
Though crude prices have recovered over the vaccination drive against Covid and a pick in demand coupled with unilateral production cut announced by Saudi Arabia, cess puts domestic crude at a disadvantage against imported oil.
Cess on domestic crude is currently levied at the rate of 20 per cent of the value of oil. Official sources said the proposal by the Union Oil Ministry is to reduce it to 10 per cent. If this is accepted by the Finance Ministry, the changes may be announced as part of Budget 2021-22 proposals, sources said….
The government is looking to reduce the tax burden on oil companies to push up domestic production that has stagnated for past several years at around 30-35 million tonne.