Ahead of the Budget, state-owned oil producer ONGC and private sector Cairn India have asked the Government to cut cess on crude oil saying the switchover from fixed to ad valorem rates had turned things from bad to worse. The producers want the Government to cut the cess to 8 per cent of the price they realise on sale of domestically produced crude oil.
In the previous Budget, Finance Minister Arun Jaitley had converted Rs 4,500 per tonne fixed cess on crude oil to 20 per cent ad valorem. “The 20 per cent cess rate provided benefit for a temporary period only up to moderate crude prices,” their association PetroFed last month wrote to Revenue Secretary Hasmukh Adhia. With the oil cartel OPEC deciding the cut production, global oil rates have started moving up.
“As a result the domestic producers of crude oil are again feeling the pinch with 20 per cent ad valorem cess and are in fact in a much worse off than before,” PetroFed wrote. It said there was an urgent need to reconsider the issue and provide the much needed relief to the domestic oil producers.