Says delay in price revision and uncertainty on subsidy impel decision.
A delay in revision of product prices and a staggered and ad hoc subsidy mechanism has prompted Indian Oil Corporation, the country’s biggest oil marketing and refining company, to hold back its advance tax payment for the ongoing quarter.
The advance tax payment of another government owned oil marketer, Bharat Petroleum, is down 39 per cent. Hindustan Petroelum, the third government-owned oil marketing company (OMC), has paid a marginally higher tax. Companies pay 15 per cent of their expected tax liability for the financial year as first instalment in the first quarter.
Against an advance tax of Rs 225 crore paid by IOC for the corresponding quarter last year when the price of petrol was decontrolled, the company has made none this quarter. “We do not know about our profitability and the compensation mechanism that will be adopted by the government. Therefore, we have not paid any advance tax. We will wait for the next quarter,” said a senior official.
| TAXING TIMES? | ||
| Company | Advance tax paid in Q1, 2010-11 | In Q1, 2011-12 |
| IOC | 225 | Nil |
| BPCL | 126 | 77 |
| HPCL | 61 | 62 |
| ONGC | 1,093 | 1,062 |
| All numbers in (Rs crore) Source: Central Board of Direct Taxes | ||
While the OMCs currently incur huge loss on diesel, kerosene and domestic LPG sales to the tune of around Rs 450 crore daily, the advance tax payment of Oil and Natural Gas Corporation (ONGC), that has been realising a higher price for crude oil over the same period last year, is also not encouraging. Against the advance tax of Rs 1,093 crore paid in thefirst quarter of 2010-11, the country’s biggest energy explorer paid Rs 1,062 crore.
Understandably, the government-owned company shoulders 28 per cent of the total under-recovery incurred by the OMCs on subsidised sale of diesel, kerosene and LPG. Against an under-recovery of Rs 18,000 crore in the first quarter of 2010-11, the OMCs are set to incur an under-recovery of around Rs 45,000 crore in the current quarter.
The OMCs currently incur a revenue loss of Rs 13.72 on every litre of diesel, Rs 26.16 on every litre of kerosene and Rs 381 for every LPG cylinder sold. The diesel price has not been raised since June 26 last year. While the petroleum ministry is pushing for an increase, the Empowered Group of Ministers on the issue has not met for a while. No date has been fixed yet.
