Oil and finance ministries waive Rs2, 154 outstanding PSU tax bill

Vol 7, PW 19 (03 Dec 03) News in Brief

PETROWATCH learns the oil and finance ministries have agreed to waive a disputed corporation tax bill of Rs2, 154cr ($456m) levied on the countrys state oil companies.

On 7th November, officials overturned a ruling by accounting watchdog, the Comptroller and Auditor General, which argued that state-owned oil companies underpaid a total of Rs2, 154cr in Corporation Tax between 1993 and 1998. A statement reveals oil and finance officials agreed that the rate of return for oil companies, will be at the rate of 12% post tax on net worth without considering the actual tax payments they made during the Administered Pricing Mechanism when the wholesale and retail price of oil products was set by the government.

Officials said any move to force payment would have a devastating impact on PSU balance sheets and hit investor sentiment. Formal approval of the decision is awaited from the Cabinet.