Cut cess on production: Oil firms

Cut cess on production: Oil firms

Even as tensions over US-Iran conflict is keeping India’s oil & gas industry on its toes, the stakeholders are looking forward to a spate of measures from the government in the upcoming Budget. Some of the major demands the industry players are looking forward in this year’s Budget includes, rationalisation of cess, natural and gas products to be brought under GST, increase in fuel subsidy among others.

According to K Ravichandran, senior vice president & group head-corporate ratings, ICRA, at the current elevated crude oil prices, the ad valorem cess of 20% limits the realisations and cash accruals of upstream companies as compared to the earlier fixed cess per MT. “Thus, a downward revision in the cess on crude oil production from the current level of 20% may help upstream companies improve their earnings in a higher crude oil price regime,” said Ravichandran.

Additionally, one of the prominent demands of the industry has been the exemption from the levy of GST on exploration activity. Also, the sector has been demanding the reduction in Minimum Alternate Tax (MAT) rate for exploration and production operations Read More

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