Lok Sabha Question No. 114 (UNSTARRED), answered on 2017-07-17
Subject: Impacts of GST on Petroleum Products
Ministry: PETROLEUM AND NATURAL GAS
Asked by: SUNIL KUMAR SINGH, SHIVAJI ADHALRAO PATIL, DHARMENDRA YADAV, Shrirang Appa Barne, SHRIKANT EKNATH SHINDE, ANANDRAO  ADSUL, VINAYAK BHAURAO RAUT

## LOK SABHA STARRED QUESTION NO. 114 TO BE ANSWERED ON 17 th  JULY, 2017

## Impacts of GST on Petroleum Products

114.      SHRI SUNIL KUMAR SINGH:

SHRI ADHALRAO PATIL SHIVAJIRAO:

SHRI DHARMENDRA YADAV:

SHRI SHRIRANG APPA BARNE:

DR. SHRIKANT EKNATH SHINDE:

SHRI ANANDRAO ADSUL

SHRI VINAYAK BHAURAO RAUT:

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)    whether due to exclusion of certain petroleum products on one hand and on the other hand inclusion  of  some  petroleum  products  under  Goods  and  Services  Tax  (GST)  the compliance of both the existing tax as well as the GST regime is likely to double the cost and adversely affect oil and gas sector in the country;
- (b)   if so, the details thereof along with the reaction of the Government thereto;
- (c)    whether  the  Ministry  of  Petroleum  and  Natural  Gas  has  taken  up  the  matter  with  the Ministry of Finance;
- (d)   if so, the outcome thereof along with the likely impact of GST on the petroleum products and concrete steps taken by the Government to negate the adverse impact in the Petroleum sector; and
- (e)    the other steps being considered by the Government for the benefit of the consumers and the Petroleum sector in the country?

## ANSWER

## MINISTER OF STATE (I/C) IN THE MINISTRY OF PETROLEUM & NATURAL GAS (SHRI DHARMENDRA PRADHAN)

- (a) to (e) The Goods and Services Tax (GST) has been implemented wef 1.7.2017. Five petroleum sector items viz., Crude Oil, Natural Gas, Petrol, Diesel and Aviation Turbine Fuel (ATF), although included under the GST Constitutional Amendment Act, are presently, outside the scope of levy of GST, till such time they  are  notified,  based  on  the  recommendation  of  the  GST  Council. The sector is, thus, faced with a hybrid tax regime on account of being subject to levy of existing taxes i.e. excise duty and State sales tax for non-GST items and  GST  for  the  remaining  petroleum  products.  The  dual  taxation  system would  lead  to  increase  in  the  cost  and  burden  of  compliance.    Further,  the exclusion  of  five  major  petroleum  sector  items  would  result  in  substantial stranded  taxes  due  to  non-availability  of  input  tax  credit  of  GST  paid  on purchases intended for these excluded items.

The concerns of oil and gas industry have been flagged by Ministry of Petroleum & Natural Gas to the Sectoral Working Group on Oil and Gas formed by the GST Council. As a result of the in-depth deliberations, in the Sectoral Working Group, a  Notification  has  been  issued,  to  levy  a  concessional  rate  of  GST  @  5%  on procurement  of  specified  goods  which  are  required  for  petroleum  operations, instead of a standard/merit rate of GST.

The Government is carrying out massive awareness campaigns on various aspects of  GST  to  ensure  dissemination  of  GST  related  information  for  the  benefit  of consumers and also petroleum industry stakeholders.  The Government has also appointed district-wise nodal officers to monitor the implementation of GST with a focus on  resolution  of  difficulties  being  faced  by  consumers  across  the  country. Ministry of Petroleum & Natural Gas has also operationalized a GST Technical Facilitation Cell to resolve GST related queries of various stakeholders in the oil and gas sector.

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