Finmin no to tonnage tax on LNG imports

union finance ministry is believed to have turned down a proposal for levying tonnage tax on liquefied natural gas imports in place of the existing taxation regime on shipping industry. during the inter-ministerial consultations for drafting an integrated lng policy, finance ministry is understood to have rejected the proposal for levying tonnage tax in place of the existing taxation regime in respect of shipping, highly-placed government sources said. however, the issue of providing tax holiday for 10 years for lng business has found favours with the finance ministry and is likely to be taken up as part of the budget exercise. though finance ministry did not support levying customs duty on import of capital goods for construction of lng terminals, at par with the power projects, the cabinet note moved by petroleum ministry has proposed customs duty on the import of capital equipment for construction for lng regassification terminal at the rate of 22.38 per cent as against 52.82 per cent applicable on other industrial units. petroleum ministry's cabinet note has proposed all lng imports on freight-on- board basis with a mandatory 26 per cent minimum participation by indian shipping companies during the entire period of lng contract, sources said. the note proposes that the indian shipping partner either on its own or with an indian company/investors as collaborator will have 50 per cent equity participation. the cabinet note on integrated lng policy proposes to include lng/regassified lng in the list of declared goods by which there would be uniform sales tax of 4 per cent on lng throughout the country. currently, different states are imposing different rates of sales tax on the sale of natural gas/regassified lng with rates varrying from 0 per cent to 20 per cent. petroleum ministry has also proposed to introduce a tonnage tax of 0 to one per cent on the lng shipping in place of the existing taxation regime, sources said. the cabinet note states that non-indian shipping companies may be allowed to join the indian shipping company subject to their having equity less than the indian shipping companies throughout the contract period, sources said. it proposes that non-indian partner should agree to transfer of technology to the indian shipping partner within 5 years from registration of the vessels. the integrated lng policy is proposed to remain unchanged for a period of 7 years from the date of announcement of the policy, sources said. during the inter-ministerial consultations, the power ministry observed that lng shipping should be through vessels bearing indian flag irrespective of whether it is on fob or cif basis. the shipping ministry also took similar lines but put a condition of putting in place immediately a tonnage tax regime with zero to one per cent tax.

Finmin no to tonnage tax on LNG imports

<img src=/photo.cms?msid=979360626 align=left>UNION finance ministry is believed to have turned down a proposal for levying tonnage tax on Liquefied Natural Gas imports in place of the existing taxation regime on shipping industry.

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