Online BusinessONGC seeks windfall tax on crude oil
State-run Oil and Natural Gas Corp (ONGC) has sought levy of windfall tax on crude oil price of over $60 per barrel to pay for fuel subsidies.
Vehemently opposing the present ad-hoc subsidy regime, ONGC has suggested that a Special Oil Tax (SOT) or Windfall Tax may be levied on crude oil producers if their produce fetched any price over $60 per barrel.
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ONGC said partial increase in international oil rates need to be passed on the consumers while a transparent mechanism which include SOT or windfall tax should be put in place to deal with the un-covered portion of the cost.
The uncovered portion of increase in cost of raw material (crude oil) needs to be equitably shared between upstream firms (like ONGC), refineries, oil marketing companies and the Government.
While the Central Government should issue bonds to cover for a per-fixed portion, excise duty should be reduced to lower the impact of spike in international rates.
The state government should also be asked to chip in by forgoing the incremental revenues they get because of sales tax/VAT rates being ad-valorem, it said.
ONGC said it was ready to shoulder its responsibility of sharing a part of the burden, "transparency needs to be brought about in the system of sharing of under-recoveries (revenue losses)."
The B K Chaturvedi Committee had last year recommended SOT to kick in at USD 75 per barrel but its report had been not implemented so far.
The Expert Group on Fuel Pricing headed by Kirit Parikh is the third panel constituted by the Government on the issue with recommendations of previous C Rangarajan committee and B K Chaturvedi committee not fully implemented.