Petroleum products Archives

Assocham seeks inclusion of petroleum products in GST

July 25, 2019 admin Comments 0 Comment

Industry body Assocham on July 25 sought inclusion of petroleum products in GST and subsuming of some local and state taxes like stamp duty.

“The two-year period for keeping petroleum products outside GST is almost over. Also, these products being outside GST lead to increase in cost for businesses. Therefore, these products should be brought under GST,” stated a memorandum by the chamber to the GST Council.

Besides, it said, subsuming mandi tax, stamp duty, road tax and vehicle tax in GST would help streamline businesses and facilitate seamless credit of Input Tax Credit (ITC), which will reduce cascading impact of taxes.

The chamber also suggested to the GST Council that sale of scrips issued for different duty drawbacks and market promotion should not be subjected to levy of Goods and Services Tax (GST).

Other suggestions include cross-utilisation of CGST and IGST credits, flexibility on GST to restaurants and real estate sectors and streamlining and clarity in the levy of such tax on international transactions.

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Source: Money-Control

GST Council may bring natural gas, aviation turbine fuel under its purview at next meeting

June 6, 2018 admin Comments 0 Comment

GST Council is likely to bring in two petroleum products – natural gas and aviation turbine fuel (ATF) – under the ambit of the new indirect tax system at its next meeting, a senior government official told Moneycontrol. GST Council: natural-gas The date of the Council meeting is yet to be decided but it is expected to happen later this month, the official said.

The rate at which these two products will be taxed is yet to be decided, the official said, adding that ATF may attract 12 percent tax.

“Discussion regarding inclusion of natural gas and ATF has already begun. If there is consensus, the GST Council, may introduce these products under GST,” the official said.

Currently, five petroleum products – petrol, diesel, crude oil, natural gas and ATF – are excluded from GST. These five items will continue to be taxed in accordance with the pre-GST tax regime, till the highest decision-making panel in the new taxation system, the GST Council, chooses to include it.

Under the existing structure, the fuels attract the Centre’s excise duty and a state’s value added tax. Both these and all other levies will get subsumed under GST if they were brought under its ambit.

The decision on their inclusion depends on the financial position of the states as revenues from these five petroleum products constitute a substantial chunk of state government finances.

States are incurring losses as GST, introduced from July 1, 2017, subsumed a dozen of taxes, introducing single levy, in a bid to simplify taxation system and remove the cascading effect of ‘tax on tax’ in the country.

Also Read: Petrol Should be Brought Under GST, Reiterates Dharmendra Pradhan

The Council had decided that states would receive provisional compensation from Centre for loss of revenue due to abolition of taxes such as VAT, octroi after the implementation of new tax system. The compensation would be met through levy of a ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first five years.

During July-March, 2017-18, the Centre paid Rs 47,844 crore as compensation cess to the states.

According to the industry, the exclusion of ATF and natural gas from GST is increasing the cost of these products as tax on inputs is not being credited against sale of these products, which ultimately, adds to the cost of production.

For instance, last month, the aviation ministry sought inclusion of the ATF under the GST umbrella as soaring global crude oil prices raised prices of jet fuels, among the biggest costs for an airline. Rise in international crude oil price has increased ATF cost by nearly 40 percent during the first five months of the calendar year. A higher jet fuel cost makes air tickets more expensive, ultimately affecting the customers.

Similarly, natural gas, natural gas is widely used as industrial input by a variety of industries such as steel, fertilizer, chemicals, and cement, among others. The industry has been complaining that unavailability of tax credit is against the basic objective of GST, which is to eliminate cascading impact of taxes.

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Source: Moneycontrol

Odisha to decide on petrol, diesel under GST when Council discusses matter

April 26, 2018 admin Comments 0 Comment

The Odisha government on Wednesday said it would take a call over the inclusion of petrol and diesel under the ambit of Goods and Services Tax when the matter is brought before the GST Council. petroleum-under-gst

“The state government will take a decision whether the petrol and diesel would be included under the purview of the GST when a proposal in this regard is brought in the GST Council,” said Finance Minister Sashi Bhusan Behera in his reply to a debate in the assembly on an adjournment motion over the increasing price of petrol and diesel.

He said Union Finance Minister is the chairman of the empowered committee and when the Minister brings the issue, it would discussed in the committee.

Behera admitted that the price of petrol and diesel will come down if it is brought under the ambit of GST.

The Finance Minister said that the empowered committee had decided to keep six items including petroleum products out of the GST, which was rolled out across the country from July 1 last year.

Giving a comparative figure across the country, Behera said the price of the two products is less than other states.

He blamed the Central government for increasing taxes on the two items repeatedly when the international prices were low and suggested to reduce the rate of central excise and additional taxes on petrol and diesel to bring down the prices of the two products.

He also claimed that Odisha collects only 26 per cent of VAT while the rate of VAT on petrol and diesel in other states are much higher.

Leader of Opposition Narasingha Mishra said that instead of accusing each other, the Assembly should adopt a unanimous resolution to recommend the Central government include petrol and diesel under the ambit of GST.

Ridiculing Union Petroleum Minister Dharmendra Pradhan who has given a call to states to include petrol and diesel under the purview of the GST, the Congress leader said: “You made a law that petroleum products can not be included in the GST. Besides, the states do not have the power to amend constitution to bring petrol and diesel under GST,”.

However, Bharatiya Janata Party (BJP) MLA Pradip Puruhit said the Central govenrment has already reduced central excise on petrol by Rs 2 per litre and also urged the state government to recommend petrol and disel be included under GST.

--IANS

Centre cuts GST rates on oil exploration and production

October 12, 2017 admin Comments 0 Comment

Setting the stage for inclusion of some of the petroleum products in the Goods and Services Tax regime, the government on Wednesday reduced GST rates for exploration and production sector to reduce the cascading effect arising on account of non-inclusion of petrol, diesel, aviation turbine fuel, natural gas and crude oil.

The latest move by the government comes after it reduced basic excise duty on petrol and diesel by Rs 2 per litre last week, following which governments of Gujarat, Maharashtra and Himachal Pradesh also reduced the VAT rates on petrol and diesel in their respective states.

Detailing the recommendations made by the GST Council in its 22nd meeting on Friday, the finance ministry in a statement said that GST rate on offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles would be 12 per cent, lower than the earlier decided rate of 18 per cent. Also, transportation of natural gas through pipeline will attract 5 per cent goods and service tax without input tax credit or 12 per cent with full ITC as against the earlier rate of 18 per cent.

The finance ministry also said that GST on the import of rigs and ancillary goods imported under the lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions. Also, GST rate on bunker fuel has been reduced to 5 per cent, both for foreign going vessels and coastal vessels.

Notifications to give effect to these proposals will be issued shortly, the ministry said.

Also read: GST Council to discuss bringing real estate under its ambit: FM

Tax experts said that the GST Council should consider inclusion of some of the left out petroleum products for the complete benefit for the sector than taking these ad-hoc relief measures. “The much-anticipated issues in the oil and gas sector, because of exclusion of petrol, diesel, crude, natural gas and ATF, have started surfacing. The exclusion of these products from GST increases the cost of these products as input GST not being creditable against the sale of these products adds to the cost of these products. Further, excise duty / VAT payable on sale of these products is not available as credit to industries buying these products. Thus, it is a double hit,” Abhishek Jain, Tax Partner, EY India, said.

Jain further said, “It is encouraging to see various benefits being provided to this sector like lowering of excise duty and VAT rate (by some States) on petrol and diesel; reduction of GST rate from 18 per cent to 5 per cent (without credit) or 12 per cent (with credit) on transportation of natural gas through pipeline; reduction of GST rate on offshore works contract services related to oil and gas exploration from 18 per cent to 12 per cent, reduction of good and service tax on bunker fuel from 18 per cent to 5 per cent. However, instead of these ad hoc relief measures, it would be great if the GST Council uses this momentum to include these products into goods &service tax which would provide complete relief to this sector.”

Also read: Petrol Should be Brought Under GST, Reiterates Dharmendra Pradhan

Keeping petroleum products such as petrol, diesel, natural gas out of the ambit of the Goods & Service Tax has resulted in a cascading effect and higher cost in absence of input tax credit for upstream companies such as oil and gas exploration firms as well as for downstream refining companies.