Budget to push up cost of offshore oil exploration

The Budget clarification on extension of service tax to include all activities in the entire continental shelf and exclusive economic zone will increase the cost of offshore exploration for Oil and Natural Gas Corporation (ONGC), the country’s biggest explorer. Reliance Industries Ltd, another major explorer, will also bear the impact of this tax, though it declined to quantify. “We have to pay an additional service tax of Rs 1,000 crore annually,” said ONGC’s director (finance), D K Saraf. The Budget clarified that any service which the upstream oil companies procure while undertaking exploration activity in offshore areas will be subject to service tax. The companies were of the view that taxes would apply only after a vessel, structure or installation comes into operation.

for further: www.business-standard.com/india/news/budget-to-pushcostoffshore-oil-exploration/387149/