India’s oil industry seeks lower GST rates in upcoming Budget
As the nation gears up for the upcoming Budget 2026-27, India’s oil and gas industry is pinning its hopes on the government to include crude oil and natural gas under the Goods and Services Tax (GST) framework at a lower slab of 5%. This move is expected to significantly improve the ease of doing business for the industry, which has been facing challenges due to the current tax structure.
The industry’s expectations were echoed by Kapil Garg, Founder of Oilmax Energy, who stated, “We remain hopeful of the inclusion of petroleum within the GST framework.” This sentiment is shared by many stakeholders in the industry, who believe that the inclusion of petroleum products under GST will bring about a much-needed simplification of the tax structure.
Currently, petroleum products such as crude oil, natural gas, and petroleum coke are exempt from GST, and are instead taxed under the Central Excise Act and the Value Added Tax (VAT) laws of the states. This has resulted in a complex tax structure, with multiple tax rates and compliance requirements. The industry is hoping that the government will take a cue from the recommendations of the Kelkar Committee, which had suggested that petroleum products be brought under the GST framework.
The inclusion of petroleum products under GST is expected to have a positive impact on the industry in several ways. Firstly, it will simplify the tax structure, reducing the complexity and compliance burden on businesses. Secondly, it will help to reduce the cascading effect of taxes, where taxes are levied on taxes, resulting in a higher tax burden. Finally, it will help to increase the competitiveness of the industry, by reducing the tax burden and allowing businesses to pass on the benefits to consumers.
Another key demand of the industry is compensation for the under-recoveries made on LPG sales. According to an ICRA executive, the industry may seek compensation for the losses incurred due to the sale of LPG at subsidized rates. This is a long-standing issue, which has resulted in significant losses for the industry. The government had earlier provided compensation to the industry for the under-recoveries, but this has been discontinued in recent years.
The demand for compensation is based on the fact that the industry is required to sell LPG at subsidized rates, which results in significant losses. The government had earlier provided compensation to the industry for these losses, but this has been discontinued in recent years. The industry is hoping that the government will reconsider its decision and provide compensation for the under-recoveries made on LPG sales.
The upcoming Budget 2026-27 is expected to be a crucial one for the oil and gas industry, with several key announcements expected. The industry is hoping that the government will take a positive view of its demands and announce measures to simplify the tax structure and provide compensation for the under-recoveries made on LPG sales.
In conclusion, the oil and gas industry is seeking inclusion of crude oil and natural gas under GST at a lower slab of 5% in the upcoming Budget 2026-27. The industry is also seeking compensation for the under-recoveries made on LPG sales. These demands are expected to have a positive impact on the industry, by simplifying the tax structure and reducing the tax burden. The government is expected to take a cue from the recommendations of the Kelkar Committee and announce measures to bring petroleum products under the GST framework.
As the nation waits with bated breath for the upcoming Budget, the oil and gas industry is hoping that its demands will be met. The industry is confident that the government will take a positive view of its demands and announce measures to simplify the tax structure and provide compensation for the under-recoveries made on LPG sales.
The upcoming Budget 2026-27 is expected to be a game-changer for the oil and gas industry, with several key announcements expected. The industry is hoping that the government will take a cue from the recommendations of the Kelkar Committee and announce measures to bring petroleum products under the GST framework. This is expected to have a positive impact on the industry, by simplifying the tax structure and reducing the tax burden.
In the words of Kapil Garg, Founder of Oilmax Energy, “We remain hopeful of the inclusion of petroleum within the GST framework.” This sentiment is shared by many stakeholders in the industry, who believe that the inclusion of petroleum products under GST will bring about a much-needed simplification of the tax structure.
As the nation gears up for the upcoming Budget, the oil and gas industry is pinning its hopes on the government to announce measures to simplify the tax structure and provide compensation for the under-recoveries made on LPG sales. The industry is confident that the government will take a positive view of its demands and announce measures to bring petroleum products under the GST framework.
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