India exempts rupee payments for Iran oil from hefty taxes


India exempts rupee payments for Iran oil from hefty taxes

The finance ministry has exempted rupee payments made to the National Iranian Oil Co. for crude oil imports from a steep withholding tax, according to a government order reviewed by Reuters.

The exemption, put in place December 28 but backdated to November 5, will allow Indian refiners to settle about $1.5 billion of outstanding payments to NIOC. Those have been building up since Tehran was put under stringent US sanctions in early November.

The two countries on November 2 signed a bilateral agreement to settle oil trades through an Indian government-owned bank, UCO Bank, in the Indian currency, which is not freely traded on international markets.

However, the income of a foreign company that is deposited in an Indian bank account is subject to a withholding tax of 40 percent plus other levies, leading to a total take by the authorities of 42.5 percent. Read More

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