Lower GST rate may boost Exploration and Production sector

India has reduced the goods and service tax on bunker fuel oil, known as bunker fuel, to 5 percent for all vessels.
Image used for representational purpose only
Image used for representational purpose only

NEW DELHI: The government is likely to issue a notification this month to reduce the cascading of taxes arising on account of non-inclusion of petrol, diesel, aviation turbine fuel, natural gas and crude oil in goods and services tax (GST).

In order to incentivise investments in the exploration & production (E&P) sector and downstream sector, the GST Council had approved certain changes in the GST rate structure for specified goods and services.
The decisions were taken at the 22nd meeting held on October 6, according to a statement from the finance ministry. According to the new rate structure, the offshore works contract services and associated services relating to oil & gas exploration and production in the offshore areas beyond 12 nautical miles will attract GST of 12 per cent.

Those in the business of transportation of natural gas through pipeline will attract GST of 5 per cent without input tax credits (ITC) or 12 per cent with full ITC. Import of rigs and ancillary goods imported under lease will be exempt from IGST. But, this will be subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions. Further, GST rate on bunker fuel will be reduced to 5 per cent for both foreign going vessels and coastal vessels.

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The New Indian Express
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