(ET)
The government wants oil companies to pay Rs 34,000 crore in dividend, profit petroleum and royalty in this financial year, about 15% more than they did last year, in a bid to raise resources for public spending amid economic slowdown and corporate tax cut. The finance ministry recently conveyed to the petroleum and natural gas ministry that state-run oil companies would need to step up dividend payout this year, which will increase overall revenue receipt from the oil sector and help the government meet its revenue target, said people aware of the matter.
The target of Rs 34,000 crore was fixed ahead of last week’s decision to cut corporate tax rate, which is expected to leave a Rs 1.45 lakh crore revenue gap for the government this fiscal. This target may be revised upwards soon and companies will be expected to pay a higher dividend and return to shareholders almost all the additional profit they make from tax cuts, said the people. Officials at the two ministries will soon begin discussions with company executives on the contribution each firm can make. The target includes dividend from state-run oil companies, profit petroleum and royalty from offshore oil and gas fields, and petroleum licensing fee.
