Oil and Natural Gas Corp Ltd and Oil India Ltd will pay royalty and cess tax only to the extent of their equity holding in oil and gas blocks given to them before 1999, Oil Minister Dharmendra Pradhan said after a cabinet meeting
The companies had to pay 100 percent royalty and cess tax from the blocks under the earlier production sharing contract, making it a big disincentive to invest in production growth of the blocks, Pradhan said
Pradhan said that the cabinet also extended the time period given to oil and gas companies to develop hydrocarbon blocks in the northeastern part of India. Production from these blocks will be linked to market prices of natural gas, the minister said
Pradhan said the government also decided to give tax exemption on capital spending on oil and gas blocks given before 1999 when India’s first bidding round was kicked off
It increased the number of days to announce force majeure due to a crisis on an oil and gas block located in a challenging region from seven days to 14 days, the minister said
He added these incentives will help the two state-owned companies invest in increasing production of oil and gas.