Two days after Prime Minister Narendra Modi held a meeting with heads in the petroleum industry, the government said it would soon issue notifications lowering the goods and services tax (GST) rates on the sector.
On Friday, the GST Council had revised the rates on transport of natural gas through pipelines and offshore work, partially addressing concerns on cascading of taxes for the sector. Transportation of natural gas through a pipeline would attract five per cent GST without input tax credit and 12 per cent with it.
The Council proposed that offshore works contract services and associated services relating to oil and gas exploration and production in offshore areas beyond 12 nautical miles will attract 12 per cent GST.
On Monday, Modi met heads and senior officials from oil companies for encouraging the exploration of hydrocarbons in the country. The participants argued for inclusion of natural gas and electricity under GST.
Import of oil rigs and ancillary goods imported under lease will be exempted from integrated GST (IGST). “It will be subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions,” the Centre said.