TIL Desk/Business/New Delhi/ The government has exempted rupee payments made to Iran’s national oil company NIOC towards the purchase of crude oil from payment of any tax, according to a Gazette notification. 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.
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.
Exempting payments received by NIOC for crude oil it sells to Indian refiners, the notification said the Iranian firm “shall not engage in any activity in India, other than the receipt of income under the aforesaid arrangement”. It said, “the notification shall be deemed to have come into force from the 5th day of November 2018”. This will help clear close to USD 2 billion of payments Indian refiners are holding for oil they bought from Iran during November and October.
