IOCL pays Rs 3K cr tax to Odisha for refinery

Last month, the state govt agreed to give Rs 700 crore per annum of loan for 15 years to IOC’s Paradip refinery

State-owned Indian Oil Corp (IOC) Tuesday said it has paid Rs 2,935 crore to the Odisha government as part of the settlement reached to get back part of the tax incentives for the Paradip refinery project in the state. Last month, the state government agreed to give Rs 700 crore per annum of interest-free loan for 15 years to IOC to make up for the withdrawn incentive of 11-year deferment on payment of sales tax (VAT) on Paradip refinery products sold in the state. This essentially meant IOC would pay VAT on fuel sold in the state and in return would get an interest-free loan. In keeping with the scheme, "IOC has paid Rs 2,935 crore to the Government of Odisha today towards VAT payment for the period November 2015 to July 2017," the company said in a statement here. "This marks the resolution of the issue of VAT deferment for IndianOil's Paradip Refinery in Odisha," the company tweeted separately. The 15 million tonnes a year Paradip refinery commenced commercial operations in November 2015.

Odisha had on February 22 withdrawn the promised 11-year VAT or sales tax deferment promised in 2004. IOC dragged the state government to the court for going back on its promise.

In the negotiations that followed, the viability gap funding for Paradip refinery project was revised to Rs 700 crore per annum payable in four equal instalments in each quarter in the form of interest-free loan for 15 years starting from financial year 2016-17.