Bhubaneswar, Sept 14: Expectedly Odisha will incur a loss of Rs 2,000 crore in 2016-17 due to the postponing of value added tax (VAT) to Indian Oil Corporation’s Paradip oil refinery.
The exchequer will have a loss of 11.42 per cent of the commercial tax target of Rs 17,500 crore as was fixed by the state government for the 2016-17 financial year. This information was given by Saswat Mishra, the Commercial Tax Commissioner in a letter to Additional Chief Secretary (Finance). He also mentioned that although the target was of Rs 17,500 crore from commercial tax, the state government has collected only Rs 5,530.95 crore by August, 2016 thus having a growth rate of 4.02 per cent. The below par growth rate is mainly on account of deferment of Rs 531.96 crore availed by IOCL’s Paradip refinery, which is 9.62 per cent of cumulative collection till August. IOCL has commissioned the 15 million tons crude oil refinery at Paradip at Rs 34,555 crore.
Notably based on the agreement signed by the Odisha government with IOCL, VAT deferment was set for 11 years from the date of commercial operations of the refinery. This tax adjustment had been extended to IOCL because of its operational viability, local employment and the region’s economic growth. But the state government had urged the Union Ministry of Petroleum and Natural Gas to reconsider the VAT deferment mentioned in the agreement. It’s stated that since the IOCL refinery was already delayed by over three years, the tax adjustment seems unjustified. Apart from this, the refinery capacity was expanded to 15 mtpa against nine mtpa initially been predicted.
