In a bid to woo more global oil companies, the Ministry of Petroleum and Natural Gas has proposed exemption from royalty payment and an income-tax holiday of up to 10 years for the next round of auction of oil and gas exploration blocks. Further, in its draft note to Cabinet Committee on Economic Affairs (CCEA), the ministry has suggested of shifting from the current production sharing contract (PSC) framework to a revenue-sharing model, which allows explorers to recover their costs from commercial discoveries before sharing profit with the government.
As per the present law, operators pay a 10% royalty on output from shallow water blocks, while for deep waters they pay a rate of 5% for the first seven years and 10 per cent thereafter.
Further, the ministry has also recommended to bring back income-tax holiday, which was withdrawn for gas producers through the Finance Bill 2011. As per the recommendations, the operators would be exempt from paying income tax for 10 years for production from ultra-deepwater blocks and seven years for all other areas. In addition, production of crude oil will be exempt from payment of oil cess of Rs 4,500 per tonne.
Government would hold 10th round of oil and gas block auctions under the new Uniform Licensing Policy (ULP), which would apply to all energy sources, including coal bed methane, shale gas and gas hydrates.
As per the present law, operators pay a 10% royalty on output from shallow water blocks, while for deep waters they pay a rate of 5% for the first seven years and 10 per cent thereafter.
Further, the ministry has also recommended to bring back income-tax holiday, which was withdrawn for gas producers through the Finance Bill 2011. As per the recommendations, the operators would be exempt from paying income tax for 10 years for production from ultra-deepwater blocks and seven years for all other areas. In addition, production of crude oil will be exempt from payment of oil cess of Rs 4,500 per tonne.
Government would hold 10th round of oil and gas block auctions under the new Uniform Licensing Policy (ULP), which would apply to all energy sources, including coal bed methane, shale gas and gas hydrates.
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