Skip to main content

Import of Oil-Drilling Rigs Kept Out of GST Purview

By
Import of Oil-Drilling Rigs Kept Out of GST Purview
Move to boost local exploration and production; tax rate cut on bunker fuel to 5% from 12%Import of oil-drilling rigs has been exempted from the goods and services tax (GST) levy to give a boost to domestic exploration and production, the government has said. The GST Council has also cut tax rate on bunker fuel to 5% from 12%.Nearly all deep sea drilling rigs are imported, and a bulk of the ones used in shallow waters to drill wells to probe and produce oil and gas are also of foreign origin.
Petrol, diesel, jet fuel, natural gas and crude oil have been kept out of the GST regime, resulting in continuation of cascading effect of tax-on-tax.The issue had figured during the meeting Prime Minister Narendra Modi held on Monday with CEOs of top international and Indian energy firms. They demanded the inclusion of fuels, especially natural gas, in the GST regime.The council has also decided that offshore works contract services with associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%, and transportation of natural gas through pipeline will face 5% without input-tax credits (ITC) or 12% with full credit.
Revenue secretary Hasmukh Adhia had briefed the meeting about the decisions the GST Council had taken on October 6 to grant some relief to the sector that has been hit because of GST paid on inputs could not be set off against the taxes paid on the final product.The Central Board of Excise and Customs in a statement on Wednesday gave details of the decisions taken at the council meeting, which would “incentivise“ investments in exploration and production, and downstream.“Import of rigs and ancillary goods imported under lease will be exempted from IntegratedGST, subject to payment of appropriate IGST on the supplyimport of such lease service and fulfilment of other specified conditions,“ it said.
Tax experts are of the opinion that petro products should be brought under the GST.“Instead of these ad hoc relief measures, it would be great if the Council uses this momentum to include these products into GST which would provide complete relief to this sector,“ said Abhishek Jain, tax partner, EY India.
Boost to Investment
The move to exempt import of oil rigs from goods and services tax (GST) makes sense. Also welcome is the step to reduce the GST rate to 12% for oil exploration and production activity in the deeper offshore. It should shore up investments in the capital-intensive and high-risk exploration and production sector. However, instead of these piecemeal relief measures, the entire oil and gas sector, including the main products such as diesel, petrol and jet fuel, needs to be included in the GST regime
The Economic Times, New Delhi, 12th October 2017

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more