ONGC seeks government to scrap windfall tax

19 Sep 2022 Evaluate

Oil and Natural Gas Corporation (ONGC) has sought the government to scrap windfall profit tax levied on domestically produced crude oil and instead use the dividend route to tap into bumper earnings resulting from surge in global energy prices. The company also favours a floor price for natural gas at $10 per million British thermal unit -- the current government-dictated rate -- to help bring deposits in challenging areas to production.

India first imposed windfall profit tax on July 1, joining a growing number of nations that tax super normal profits of energy companies. Export duties of Rs 6 per litre ($12 per barrel) were levied on petrol and aviation turbine fuel and Rs 13 a litre ($26 a barrel) on diesel. A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied. The duties were partially adjusted in the five rounds on July 20, August 2, August 19, September 1 and September 16, and were removed for petrol exports. Tax on domestically produced crude oil currently is Rs 10,500 per tonne while export duty on diesel is Rs 10 a litre and that on ATF is Rs 5.

ONGC is India’s largest government-run corporation and produces about 70% of India’s crude oil and natural gas. The corporation is the biggest public sector commercial organization in India.

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