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Govt exempts rupee payments for Iran oil from taxes

Govt exempts rupee payments for Iran oil from taxes

Indian government has exempted rupee payments made to Iran's national oil company NIOC towards the purchase of crude oil from payment of any tax.

The finance ministry in a December 28, 2018 Gazette notification said the National Iranian Oil Company (NIOC) will not have to pay any withholding tax on payments it gets from Indian refiners.

Background:

India had on November 2, 2018, signed an agreement with Iran to pay for crude oil it imports from the Persian Gulf nation in rupees.

Any income a foreign company receives in an Indian bank account is subject to a withholding tax of 40 per cent, which together with sundry cesses totals to 42.5 per cent.

The rupee pact was signed following the US letting India and seven other nations to keep buying Iranian oil despite sanctions were reimposed on the Islamic state on November 5, 2018.

India, which is the second biggest purchaser of Iranian oil after China, has since then restricted its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year (3,00,000 barrels per day), down from 22.6 million tonnes (4,52,000 barrels per day) bought in the 2017-18 financial year.

 

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