Oil cos seek GST changes to avoid a hit of Rs 25,000 crore
The petroleum ministry will knock on the finance ministry‘s doors to seek resolution of GST provisions that are expected to effect oil companies adversely, according to a government source.
A ministry statement issued on Monday said oil minister Dharmendra Pradhan, during a review of GST’s impact on the oil industry, asked companies to also take up the issues with state governments, particularly in the oil-and gas-producing ones, for bringing about suitable changes.
Oil companies, both in the private and public sector, have said that exclusion of crude, petrol, diesel, jet fuel and natural gas from the ambit of GST will result in huge amounts of stranded taxes for them as they will not be eligible for claiming input tax credit.
According to some estimates, state-run oil companies collectively will take a hit of Rs 25,000 crore annually. Players in the gas segment said exclusion of pipeline networks from the definition of ‘plant and machinery’ may adversely affect long-term investments in pipelines at a time when the government is pushing for a gas-based economy.
Industry representatives also proposed that green fuels such as natural gas, CNG, biodiesel and ethanol-blended petrol should be zero-rated, which will enable companies to get tax refunds on input taxes and promote less-polluting fuels.
Pradhan assured industry representatives, who sought suitable changes in GSt provisions and definitions, that he will convey their concerns to the finance minister for an “agreeable resolution”.