ONGC Windfall Tax Impact : The country’s largest oil and gas producer ONGC has requested the central government to abolish windfall tax imposed on domestically produced crude. Only after this discussion has started between the government and the oil sector.
Increased profit of oil companies
Let us tell you that ONGC says that something good can happen if the government uses the dividend route instead of levying windfall tax on oil. Significantly, due to the strong jump in global crude oil prices, the profits of oil companies have increased unexpectedly.
government fixed price
The present government has fixed the price for natural gas. It is known that the state-owned Oil and Natural Gas Corporation has supported a lower price of $ 10 per million British thermal unit for natural gas. During discussions with government officials, ONGC’s management says that the windfall tax on domestic oil producers was unfair. Especially when the government has ensured its savings by buying subsidized oil from Russia.
What is windfall tax
This windfall tax is levied on such companies, which get immediate benefits under certain circumstances. Indian oil companies are an example of this. International crude oil prices have skyrocketed after Russia’s attack on Ukraine. Oil companies have benefited a lot from this. Oil companies were reaping huge profits due to the Russo-Ukraine war, so windfall tax was imposed on them. Not only India, Italy and UK also imposed this tax on their energy companies.
35,000 crore savings
The Indian government saved Rs 35,000 crore from cheap crude oil purchased from Russia. ONGC says that it should be used to increase domestic production. If the ONGC management is to be believed, then give the savings from the purchase of Russian oil to the company that invests in many selected projects of the country. Instead of levying windfall tax on companies, they should be allowed to earn profits.
Up to 30% annual profit
The company management has requested the government that this high profit should be used for dividend, which can be justified. As per company guidelines, ONGC pays annual dividend up to 30 percent of the net profit.
deductible windfall tax
The central government reduced the windfall tax on crude oil produced in the country after the fall in the prices of crude oil in the international market. In the 5th fortnight review, the government reduced the windfall tax on domestically produced crude oil from Rs 13,300 per tonne to Rs 10,500 per tonne.
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