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

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more