Oil and gas companies will not face any new taxes after new law comes into place: Hardeep Singh Puri
Petroleum Minister Hardeep Singh Puri has said that oil and gas companies will not face any new taxes like the windfall profits tax after the coming into effect of a new law that promises stability of fiscal regime. Parliament has passed the Oilfields (Regulation and Development) Bill, 2024 that provides policy stability to investors, decriminalises provisions and promotes ease of doing business.
The minister said ‘after this bill, it will be difficult to levy new taxes like windfall tax because somebody will sue us for failing to keep the promise of fiscal stability’. He said investors looking to invest in finding and producing oil and gas want fiscal stability, and new taxes that seek to take away gains made when prices are high, without compensating for low or no margins when rates are low, are often a deterrent.
He further said India currently imports more than 85 per cent of its crude oil needs and about half of its natural gas requirement. He said ‘we have 42 billion tonnes of oil and oil equivalent reserves and a sedimentary basin spanning 3.5 million square kilometers and most of it is untapped.’ Further, he said there is an urgent and pressing need to increase domestic production of oil and gas to meet the rising demand for energy and reduce import dependence of the country.
India imposed a windfall profit tax on July 1, 2022 joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied. The tax rates were reviewed every fortnight based on average oil prices in the previous two weeks. The levy was scrapped in December last year after 30 months.
