New Delhi, Feb 24 (UNI) The oil and gas sector has urged for abolition of service tax on Exploration and Production (E&P) activities to lure foreign oil giants to bid in the future New Exploration Licencing Policy (NELP).
''Levy of service tax is a step backward in luring foreign oil giants and would discourage oil companies who have shown interest to participate in the future NELP bidding,'' a recent study said.
The industry also wants inclusion of natural gas in the list of 'declared goods' as provided under section 14 of the Central Sales Tax Act.
There is a need to streamline excise duty on MS and HSD from the current level of advalorem cum specific rate to only specific rates.
''This would rationalise the impact of duties due to volatility in international prices on the domestic consumers as well as on oil companies. This would also eliminate uncertainity in forecasting revenue estimates on account of price variations,'' said a Ficci study on the eve of Budget 2008-09.
It said one time deduction of excise duty enables government to eliminate subsidies in the form of oil bonds or upstream assistance for MS and HSD. In the process, they can revive the ailing private sector petroleum retail industry and usher in better customer service standards through competition.
They also asked for petrol and petroleum products to be put under the VAT regime as the government is planning to put GST in place from April 1, 2010.
There is a need for the government to re-introduce the concession of 30 paise per litre in surcharge on ethanol doped petrol which was withdrawn from 2004. This concession is important to oil companies to lift ethanol for blending with petrol to take advantage of this concession.
Oil and Natural Gas Corporation (ONGC) Chairman R S Sharma has said the company expects a rationalisation of duty structure in this Budget with respect to crude and petrol.
Mr Sharma urged 'declared goods' status for the petroleum sector.
There should be more equitable sharing of the burdens being borne by industry, he added.
UNI MP/RT SG KN1421