Russia's Rosneft criticises India's withholding tax, calls it a hurdle

Rosneft also raised concerns about the GST regime, saying that it is unable to claim credit of tax it pays on inputs in its Vadinar refinery

Russian oil giant Rosneft on Friday called for a change in India's tax structure and sought a review on double taxation of foreign investors.  

"India should look into streamlining of its tax system. If an Indian company invests in Russia, it has to give tax and dividends in Russia. On the other side, when we invest in India, we have to give all of this and on top of it, we are being charged a withholding tax of 20 per cent. For us, this is really not symmetrical," Pavel Fedorov, Rosneft's first vice-president for economics and finance, said at an India Russia Business summit on Friday. He added that the issue was being taken up at a bilateral level.  

Rosneft and its partners had acquired Essar Oil in 2017 for $12.9 billion; the name of Essar was changed to Nayara Energy this April. Indian companies such as ONGC Videsh and Oil India, too, have acquired considerable stakes in oil and gas assets in Russia in the past two years. Rosneft also raised concerns about the goods and services tax (GST) regime, adding that it is unable to claim credit of tax it pays on inputs in its Vadinar refinery. This is mainly because the government has kept five petroleum products -- crude oil, petrol, diesel, natural gas and aviation turbine fuel -- outside the GST ambit.      

"We see India as an important market and it is geographically well placed. Hence, we see logistical, infrastructural and trading hub potential for investment," Fedorov added. He also expressed the willingness of the company to increase investments in Nayara Energy. "We are also going to expand our retail network," he added. The statement of retail expansion comes a day after oil marketing companies such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (HPCL) absorbed Rs 1 each on petrol and diesel prices, which forced private companies in India, too, to take the hit, which might affect their marketing margins. The marketing margin by companies on petrol has now come down to Rs 0.7 a litre and that of diesel has come down to Rs 1.3 a litre.     

Out of the total 56,999 fuel outlets in India, only 6,276 are owned by private companies. Out of this, Nayara Energy runs 4,756 outlets. The other major private companies include Reliance Industries and Shell.