Ministry proposes to do away with sales tax

India’s petroleum ministry has proposed to dispense with the central sales tax (CST) imposed on inter-company and inter-state transactions between the oil companies. The waiver of CST on these transactions translates to a total relief of Rs850 crores (US$191.74 million) annually, which is now borne by oil companies as an irrecoverable tax. The biggest beneficiary of the move would be market-leader Indian Oil Corp., which is estimated to be paying about Rs420 crores (US$94.74 million). Earlier, the government had provided for compensation of these taxes through the budget, but it was discontinued in 2003. (December 28, 2006)