GST: Pradhan says will ask FinMin to address issues of oil & gas players

As per industry estimates, overall GST impact on sector will be to tune of Rs 25,000 cr

Major oil and gas players in the country have sought intervention from the petroleum ministry to include crude oil, petrol, diesel, aviation turbine fuel and natural gas under the ambit of the goods and service tax (GST). 

In a workshop moderated by the petroleum ministry on Monday, the companies highlighted that the exclusion of those products from the GST will result in huge stranded taxes in the hands of the oil industry due to non-availability of input tax credit towards non-GST products. 

According to industry estimates, the overall GST impact on the petroleum sector will be to the tune of Rs 25,000 crore. Petroleum Minister Dharmendra Pradhan has assured the companies their concerns will be raised before the finance ministry.

The petroleum products outside GST will come under the current taxation structure, including excise duty, central sales tax and state value-added tax. On one hand, while the companies will have to pay 18 per cent GST on procurement of various goods, it will not be able to claim input tax credit on the products they sell. This is likely to hit Indian Oil Corporation (IOC) by Rs 5,000 crore, while Hindustan Petroleum (HPCL) and Oil India expect a hit of Rs 400 crore and Rs 175 crore, respectively. 

ONGC Chairman and Managing Director Dinesh K Sarraf had on Friday said all oil companies were concerned about the implementation of the GST. Crude oil, natural gas and certain downstream products were out of the purview of the GST. "So while we will pay GST on inputs, we do not get credit on our output," he had said. The petroleum ministry has written on the issue to the finance ministry. "But the issue is beyond the ministry of finance and is with the GST Council," he said.

The industry representatives said the GST in its present form needs few amendments and clarifications as it may have a negative impact on domestic oil and gas production, manufacturing, capital investment, pipeline expansion plans etc. 

It was also brought to the notice of the ministry that exclusion of the pipeline network from the definition of plant and machinery may adversely affect long-term capital investment in the pipeline infrastructure projects.