With a view to develop India’s Strategic Reserves, the Indian Strategic Petroleum Reserves Limited is setting up underground crude oil storage facility in which private players including Foreign National Oil Companies and Multi National Oil Companies are participating. However, these oil companies shall be liable for taxation upon sale of crude oil from this storage facility by virtue of existing provisions of Section 5 and Section 9.
In order to encourage Foreign Oil Companies to invest in this strategic reserve facility, it is proposed to exempt the income accruing or arising to foreign company from storage of crude oil in India and sale therefrom to any person resident to India. However, the exemption is subject to following two conditions:
– Storage and sale is effected only with prior agreement or an arrangement with the Central Government or agreement or arrangement approved by the Central Government; and
– Both the Foreign Company and the agreement or arrangement should be notified by the Central Government for the sake of nation’s interest.
The amendment is effective retrospectively from 1st April 2016 (applicable for FY 15 -16)
