Government of India examining demand by oil companies to lower cess on output

The government is examining a demand by oil companies to lower cess on output by switching from a fixed amount to ad valorem as the crash in crude prices has disproportionately increased the contribution of cess to their overall cost.

If the government were to concede to the demand of oil producers, it would mainly benefit state producers Oil and Natural Gas Corp (ONGC) and Oil India LtdBSE -1.45 % (OIL) as well as private firm Cairn India Ltd.BSE -0.48 % .ONGC, the biggest operator of the producing blocks, has recently written to the oil ministry, seeking a change to ad valorem cess, or tax based on price of the product, a government official said.

At present, the output cess is fixed at Rs 4,500 per metric tonne, which looks disproportionately big as oil prices have fallen more than 60 per cent since June last year.

https://www.khabarindia.in/government-examining-demand-by-oil-companies-to-lower-cess-on-output/