The Hindu Business Line : Losses may hit corporate tax inflow from oil cos

OIL companies' contribution of corporate tax to the Centre's kitty may take a hit in the current fiscal if one were to go by the first quarter losses recorded by some of the oil behemoths, say oil industry insiders.

Industry sources said that losses suffered by some of the oil majors in the first quarter would "adversely impact" the corporate tax contributions of these companies and therefore the overall contributions under this head by the oil companies.

Indian Oil Corporation Ltd (IOC) and Bharat Petroleum Corporation Ltd (BPCL) have, few days back, reported losses for the first quarter, without making any provision towards current tax.

While IOC had provided for Rs 444 crore towards `current tax' in the same quarter last year, BPCL had provided Rs 480 crore towards `current tax' in the first quarter of fiscal 2004-05.

Oil companies collectively contributed Rs 11,180 crore as corporate tax for fiscal 2004-05 as against Rs 10,038 crore for 2003-04. In 2004-05, IOC and BPCL together provided for nearly Rs 3,800 crore as provision for current tax.

While the corporate tax contributions of oil companies may take a hit in the current fiscal, sources said that oil companies' contribution of excise duty, customs duty and state-level levies like sales tax would come to the expectations of the respective governments.

They pointed out that any upward movement in the domestic prices of four major petroleum products - petrol, diesel, LPG and kerosene - would help enhance the excise duty contributions of the oil companies.

Oil companies including ONGC, Oil India, IOC, HPCL, BPCL and GAIL cumulatively contributed Rs 1,20,946 crore to the exchequer (both Central and State Governments) during fiscal 2004-05 as against Rs 1,04,375 crore during 2003-04.

Their contributions of excise duty and customs duty swelled in 2004-05 despite the excise duty and customs duty rationalisation measures undertaken by the Central Government in June 2004 and subsequently in August 2004.

While customs duty contribution for 2004-05 stood at Rs 11,697 crore (Rs 9,552 crore), the excise duty contribution of oil companies to the Central exchequer during the same year stood at Rs 38,150 crore (Rs 35,364 crore).

In the Budget 2005-06, customs duty on crude was reduced from 10 per cent to 5 per cent, on kerosene and LPG from 5 per cent to nil and on other petroleum products from 15-20 per cent to10 per cent.

The oil marketing companies have been modulating the impact of high international oil prices on domestic retail prices of kerosene, LPG, petrol and diesel. The prices of kerosene have remained unchanged since March 2002 and of domestic LPG since November 2004.

On June 20 this year, the retail prices of petrol and diesel were raised by Rs 2.50 and Rs 2.00 per litre respectively.

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