Finance ministry of India has declared the exemption of all the rupee payments to be made to the National Iranian Oil Co. (NIOC) for the oil imports by oil merchants in India. The exemption will help the payments of about 1.5 billion dollars to be settled down. These payments have been pending since Tehran was put under strong US sanctions in early November.
The two countries signed a bilateral treaty on November 2 agreeing that all the oil trade will be settled through and Indian-government owned bank, UCO Bank. However, the income of a foreign company which is deposited in the bank is subject to the tax of 40 percent with some additional levies. This will amount to a take of 42.5 percent by the authorities. This made the agreement unworkable for Iran and led to a freeze in the payments by the refiners.
Iran will be able to use the rupee funds for a range of expenses - including imports from India, the cost of its missions in the country, direct investment in Indian projects, and its financing of Iranian students in India, according to another government document reviewed by Reuters. It can also invest the funds in Indian government debt securities. This move will benefit both the countries and will help India balance its trade which is currently tilted in favor of Iran. This tax exemption, though, only refers to crude oil. India, Iran’s top client after China, has turned to payments for Iranian oil in rupees as major banking channels dealing in global currencies are closed off by the U.S. sanctions.
Tags : #Iran #Oil #Rupee #Exemption #NIOC #UCO #Bank