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IOC to take INR 4,200 crore hit under GST regime

Gasoil News - Published on Thu, 07 Dec 2017

Image Source: indiatimes.com
Times of India quoted state-owned oil refiner Indian Oil Corporation (IOC) as saying that the impact of the goods and services tax (GST) would be nearly INR 4,200 crore as it would not be able to claim input tax credit (ITC) for automotive fuels that fall outside GST. ITC allows an entity to reduce the tax on outputs by the same amount already paid as tax on inputs.

Mr A K Sharma, IOC director (finance) said that “We face the burden of dual tax compliance. First for non-auto fuels, which are under GST, and the second on auto fuels that are not under GST but the old VAT system.” He explained that for automotive fuels like petrol and diesel — which account for 60% of the business — the company was not able to claim ITC. “We are taking it up with the government. The permanent long-term solution is to bring everything under GST. That’s a bigger issue.”

Mr Sharma said that “Since there is a state GST component too on taxes, we are talking to state governments, asking them to allow us to use the ITC in some form. Denial of credit is enriching the state and central governments.”

An internal assessment made by the corporation shows that the company will suffer Rs 2,000 crore on revenue items and another Rs 2,200 crore on capital items because of denial of ITC for auto fuels.

He said that notwithstanding the talk of country migrating to electric vehicles, IOC has embarked upon de-bottle necking its existing plants to enhance capacity. At both Paradip and Panipat refineries, the capacities will be increased from 15 million tonnes (mt) a year to 20mt in each of them. At Barauni, it will increase to 9mt from 6mt. Additions are also under way at Mathura refinery.

Source :

Posted By : Rabi Wangkhem on Thu, 07 Dec 2017
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