GST Councils Decision on Petroleum and Oil Sector

[Press Release on Petroleum & Oil Sector dated 11 October 2017]

To reduce the cascading of taxes arising on account of non-inclusion of petrol, diesel, ATF, natural gas and crude oil in GST and to incentivise investments in the E&P (exploration and production) sector and downstream sector, the GST Council in its 22nd meeting held on 6^th October, 2017 has made the following recommendations for GST rate structure for specified goods and services:

i. Offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%;

ii. Transportation of natural gas through pipeline will attract GST of 5% without input tax credits (ITC) or 12% with full ITC;

iii. Import of rigs and ancillary goods imported under lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions.

2. Further, GST rate on bunker fuel is being reduced to 5%, both for foreign going vessels and coastal vessels.

3. Notifications to give effect to the above proposals will be issued shortly.