A committee has been set up under the chairmanship of the Secretary of Union Petroleum and Natural Gas Ministry to review the Odisha Government’s tax agreement with the Indian Oil Corporation ltd (IOCl).
The State Government has estimated a revenue loss of `2,173 crore during 2016-17 due to VAT exemption to the IOCl’s refinery at Paradip.
“It is a fact that the State Government in 2004 agreed to exempt tax on oil to be produced at the refinery project,” Finance Minister Pradip Amat said in the State Assembly while replying to a question on Monday.
Stating that the State Government has already lost revenue to the tune of `475 crore towards Entry Tax and VAT to the refinery project, Amat said the State would incur a heavy revenue loss as per the agreement with the IOCl.
This apart, he said, the IOCl would retain `69,892 crore collected as Sales Tax/VAT on sale of products at the refinery for 11 years. “The IOCl will, however, return this amount to the State Government after 11 years from 2016-17 without paying any interest on the amount,” Amat said.
Therefore, he said, Odisha would lose revenue of about `24,333 crore as rebate on the Net Present Value for establishment of the refinery in the State.
As the agreement between the State Government and the IOCl has the provision of exemption of central sales tax over the refinery project for 30 years, Amat said the State would lose an estimated `1,000 crore in 2016-17.
Similarly, the State would incur a revenue loss of `197 crore in 2016-17 over exemption of the Entry Tax on crude oil, Amat informed.