India’s oil industry seeks lower GST rates in upcoming Budget
As the Indian government prepares to unveil its Budget for the fiscal year 2026-27, the oil and gas industry is pinning its hopes on 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 in the sector, which has been grappling with high taxes and complex regulations.
The oil and gas industry has been seeking the inclusion of petroleum products under the GST framework for several years now. However, the government has been hesitant to do so, citing concerns over revenue loss. Nevertheless, the industry remains optimistic that the government will finally heed their demands and bring crude oil and natural gas under the GST framework at a lower rate.
“We remain hopeful of the inclusion of petroleum within the GST framework,” said Kapil Garg, Founder of Oilmax Energy. The industry’s demand is not unfounded, as the inclusion of petroleum products under GST is expected to simplify the tax structure and reduce the compliance burden on companies.
Currently, petroleum products are subject to a complex web of taxes, including excise duty, value-added tax (VAT), and other levies. The GST, which was introduced in 2017, has subsumed many of these taxes, but petroleum products have been kept out of its purview. As a result, companies in the oil and gas sector have to navigate a complex tax landscape, which can be time-consuming and costly.
The inclusion of crude oil and natural gas under the GST framework at a lower rate of 5% is expected to reduce the tax burden on companies and make the sector more competitive. It will also help to reduce the prices of petroleum products, which will have a positive impact on the economy as a whole.
In addition to seeking the inclusion of petroleum products under GST, the industry is also seeking compensation for the under-recoveries made on LPG sales. According to an executive at ICRA, a credit rating agency, the industry may seek compensation from the government for the losses incurred on LPG sales.
The government had earlier capped the price of LPG cylinders, which resulted in under-recoveries for oil marketing companies. The companies had to sell LPG cylinders at a loss, which affected their profitability. The industry is now seeking compensation from the government for these losses, which is expected to be a significant amount.
The demand for lower GST rates and compensation for LPG under-recoveries is not the only issue that the oil and gas industry is facing. The sector is also grappling with other challenges, such as the decline in oil prices, the surge in global demand, and the need to invest in new technologies to remain competitive.
Despite these challenges, the oil and gas industry remains a critical component of the Indian economy. The sector is a significant contributor to the country’s GDP and provides employment opportunities to millions of people. The government’s decision to include petroleum products under the GST framework at a lower rate will be a major boost to the sector and will help to drive growth and investment.
In conclusion, the oil and gas industry in India is seeking the inclusion of crude oil and natural gas under the GST framework at a lower rate of 5% in the upcoming Budget. The industry is also seeking compensation for the under-recoveries made on LPG sales. The government’s decision on these demands will have a significant impact on the sector and the economy as a whole. As the Budget approaches, all eyes are on the government to see if it will heed the industry’s demands and provide a boost to the oil and gas sector.
The inclusion of petroleum products under the GST framework is a long-standing demand of the industry, and its implementation will have far-reaching consequences. It will simplify the tax structure, reduce the compliance burden, and make the sector more competitive. The government’s decision on this issue will be closely watched by the industry and the market, and it is expected to have a significant impact on the economy.
As the Budget for 2026-27 approaches, the oil and gas industry is hopeful that the government will finally heed their demands and provide a boost to the sector. The industry’s demand for lower GST rates and compensation for LPG under-recoveries is not unfounded, and it is expected to have a positive impact on the economy.
The government’s decision on the industry’s demands will be a major factor in determining the growth and investment in the sector. The oil and gas industry is a critical component of the Indian economy, and the government’s decision will have far-reaching consequences.
In the end, the government’s decision on the oil and gas industry’s demands will be a major factor in determining the growth and investment in the sector. The industry is hopeful that the government will finally heed their demands and provide a boost to the sector. As the Budget approaches, all eyes are on the government to see if it will take a positive step towards the oil and gas industry.
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