GST: Pradhan to take up with Jaitley concerns of oil industry on input taxes
Pradhan reviewed the impact of GST on the oil and gas sector after state-owned and private companies from upstream, downstream and midstream sectors.business Updated: May 29, 2017 20:58 IST
Sensing that fuel prices may remain high under the goods and services tax (GST) regime, petroleum minister Dharmendra Pradhan said on Monday he will convey to finance minister, Arun Jaitley, the negative impact of excluding fuel products on the oil industry when the country’s biggest tax regime is rolled out from July.
The minister also asked the representatives of the industry to raise their concerns with respective state governments particularly oil and gas producing states, to agree to make changes in the provisions that are going to impact the sector.
The move assumes importance as the change in tax regime may impact profits of some of the biggest companies of the country, including Reliance Industries, Indian Oil Corp, ONGC, BPCL, HPCL and Essar Oil.
In an interaction with industry players, Pradhan reviewed the impact of GST on the oil and gas sector after state-owned and private companies from upstream, downstream and midstream sectors.
“Several petroleum products namely crude oil, petrol, diesel, aviation turbine fuel and natural gas have been kept out of the GST…This exclusion will result in huge stranded taxes in the hands of oil industry due to non-availability of input tax credit towards non-GST products,” an official release said.
The oil industry demanded a few amendments in the GST laws and clarifications as the country’s biggest tax reform may have a negative impact on the domestic oil and gas production, manufacturing, capital investment and pipeline expansion plans.
“Exclusion of pipeline network from the definition of plant and machinery may adversely affect long term capital investment in the pipeline infrastructure projects,” the release said.
The industry proposed that green fuels like natural gas, CNG, bio-diesel and ethanol blended petrol should be zero-rated, which will enable the companies to get tax refunds on input taxes, to promote environment friendly fuels.
Pradhan assured industry officials that he will convey the concerns to the finance minister for an “agreeable resolution”.