India’s oil industry seeks lower GST rates in upcoming Budget
The Indian oil and gas industry is gearing up for the upcoming Budget 2026-27, and one of the key demands from the sector is the inclusion of crude oil and natural gas under the Goods and Services Tax (GST) framework at a lower rate of 5%. This move is expected to improve the ease of doing business and provide a much-needed boost to the industry. The industry has been seeking this inclusion for several years, and with the Budget just around the corner, hopes are high that the government will finally heed their demands.
According to Kapil Garg, Founder of Oilmax Energy, “We remain hopeful of the inclusion of petroleum within the GST framework.” This sentiment is echoed by other industry players, who believe that the inclusion of crude oil and natural gas under GST will help to reduce the complexities and inefficiencies that currently plague the sector. The current system, where petroleum products are taxed under the GST framework but crude oil and natural gas are not, has led to a situation where the industry is facing significant challenges in terms of taxation and compliance.
One of the main benefits of including crude oil and natural gas under GST is that it will help to reduce the cascading effect of taxes. Currently, the industry is forced to pay taxes on taxes, which increases the overall cost of production and makes Indian oil and gas companies less competitive in the global market. By including crude oil and natural gas under GST, the government can help to reduce this cascading effect and make the industry more competitive.
Another key demand from the industry is compensation for the under-recoveries made on LPG sales. According to an executive from ICRA, the industry may seek compensation for the losses incurred on LPG sales, which have been subsidized by the government. The executive noted that the industry has been incurring significant losses on LPG sales, and the government needs to provide compensation to ensure that the industry remains viable.
The demand for lower GST rates and compensation for under-recoveries on LPG sales is not new, and the industry has been raising these issues for several years. However, with the upcoming Budget, the industry is hoping that the government will finally take concrete steps to address these concerns. The industry believes that the inclusion of crude oil and natural gas under GST and the provision of compensation for under-recoveries on LPG sales will help to improve the overall viability of the sector and make it more competitive in the global market.
The Indian oil and gas industry is a critical sector that contributes significantly to the country’s economy. The sector is responsible for meeting the country’s energy needs, and it also provides employment opportunities to thousands of people. However, the sector is facing significant challenges, including the impact of the COVID-19 pandemic, which has led to a decline in demand and a significant drop in oil prices.
In this context, the demand for lower GST rates and compensation for under-recoveries on LPG sales is critical. The industry believes that these measures will help to reduce the burden on the sector and make it more competitive in the global market. The government needs to take concrete steps to address the concerns of the industry and provide a supportive framework that will help the sector to grow and thrive.
The upcoming Budget 2026-27 provides an opportunity for the government to address the concerns of the oil and gas industry. The industry is hoping that the government will include crude oil and natural gas under the GST framework at a lower rate of 5% and provide compensation for the under-recoveries made on LPG sales. These measures will help to improve the ease of doing business, reduce the cascading effect of taxes, and make the industry more competitive in the global market.
In conclusion, the Indian oil and gas industry is seeking inclusion of crude oil and natural gas under GST at a lower rate 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 critical to the growth and viability of the sector, and the government needs to take concrete steps to address the concerns of the industry. With the Budget just around the corner, the industry is hoping that the government will finally heed their demands and provide a supportive framework that will help the sector to grow and thrive.
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