ONGC Videsh faces tax demand

DEHRADUN, September 20, 2016 – The international arm of India’s Oil and Natural Gas Corporation (ONGC), ONGC Videsh, has been hit by a service tax demand of close to USD 1 billion, local media reported on Tuesday.

The bone of contention is whether ONGC Videsh’s overseas subsidiaries, joint ventures and branch offices through which it conducts its international oil and gas projects are in fact rendering a service to the company. This would imply that ONGC Videsh would be liable to pay services taxes in full.

India’s Service Tax Department argues this is the case and has demanded more than USD 915 million in service tax. According to sources cited by Iocal media, ONGC Videsh questions the department’s reasoning, claiming, among other things, that even if services were rendered, they happened overseas and therefore cannot be subject to India’s service tax. The company holds stakes in 37 projects in 17 countries, including Russia, Myanmar and Colombia.

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