India’s oil industry seeks lower GST rates in upcoming Budget
As the Union Budget for 2026-27 approaches, India’s oil and gas industry is gearing up to make a strong pitch for the inclusion of crude oil and natural gas under the Goods and Services Tax (GST) framework. The industry is seeking a lower GST rate of 5% for these essential commodities, which are currently outside the GST purview. This move is expected to improve the ease of doing business and provide a much-needed boost to the sector.
The oil and gas industry has been lobbying for the inclusion of petroleum products under the GST framework for quite some time now. According to Kapil Garg, Founder of Oilmax Energy, “We remain hopeful of the inclusion of petroleum within the GST framework.” The industry believes that the inclusion of crude oil and natural gas under GST will help to reduce the complexity of taxation and make the sector more competitive.
Currently, petroleum products such as crude oil, natural gas, and petroleum coke are outside the GST framework and are governed by separate laws and regulations. The industry is required to pay various taxes such as excise duty, value-added tax (VAT), and central sales tax (CST) on these products. This leads to a complex tax structure and results in higher costs for the industry.
The inclusion of crude oil and natural gas under the GST framework at a lower rate of 5% is expected to simplify the tax structure and reduce the costs for the industry. This, in turn, will make the sector more competitive and attractive to investors. The industry is also hoping that the lower GST rate will help to increase the demand for petroleum products and boost the overall economic growth.
In addition to the inclusion of crude oil and natural gas under GST, the industry is also seeking compensation for the under-recoveries made on LPG sales. According to an ICRA executive, the industry may seek compensation from the government for the losses incurred on the sale of LPG. The government had earlier asked the oil marketing companies to absorb the losses on the sale of LPG, which has resulted in significant under-recoveries for the industry.
The oil and gas industry is a critical sector for the Indian economy, and the government’s decision on the GST rates for petroleum products will have a significant impact on the sector. The industry is hoping that the government will consider their demands and announce a lower GST rate for crude oil and natural gas in the upcoming Budget.
The inclusion of petroleum products under the GST framework is also expected to help the government to increase its revenue collections. The government can collect GST on the sale of petroleum products, which will help to increase the revenue collections and reduce the fiscal deficit.
In conclusion, the oil and gas industry is seeking a lower GST rate of 5% for crude oil and natural gas in the upcoming Budget. The industry believes that the inclusion of these products under the GST framework will simplify the tax structure, reduce the costs, and make the sector more competitive. The industry is also seeking compensation for the under-recoveries made on LPG sales. The government’s decision on the GST rates for petroleum products will have a significant impact on the sector, and the industry is hoping that the government will consider their demands and announce a lower GST rate in the upcoming Budget.
The demand for a lower GST rate for petroleum products is not new, and the industry has been lobbying for this for quite some time now. However, the government’s decision on this issue will depend on various factors, including the revenue collections and the fiscal deficit. The government will have to balance the demands of the industry with the need to increase revenue collections and reduce the fiscal deficit.
The oil and gas industry is a critical sector for the Indian economy, and the government’s decision on the GST rates for petroleum products will have a significant impact on the sector. The industry is hoping that the government will consider their demands and announce a lower GST rate for crude oil and natural gas in the upcoming Budget. This will help to simplify the tax structure, reduce the costs, and make the sector more competitive.
As the Union Budget for 2026-27 approaches, the oil and gas industry is waiting with bated breath for the government’s decision on the GST rates for petroleum products. The industry is hoping that the government will consider their demands and announce a lower GST rate for crude oil and natural gas. This will help to boost the sector and increase the economic growth.
In the end, the government’s decision on the GST rates for petroleum products will depend on various factors, including the revenue collections and the fiscal deficit. However, the industry is hoping that the government will consider their demands and announce a lower GST rate for crude oil and natural gas in the upcoming Budget. This will help to simplify the tax structure, reduce the costs, and make the sector more competitive.
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