India has announced a new goods and services tax (GST) structure for the oil and gas industry to reduce the cascading of taxes on account of non-inclusion of various energy products and to encourage investments in the exploration and production and downstream sectors.
GST is not aplicable to petrol, diesel, air turbine fuel, natural gas and crude oil
According to a government statement, 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%.
Transportation of natural gas through pipeline will attract GST of 5% without input tax credits or 12% with full ITC, while 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.
Further, GST rate on bunker fuel is being reduced to 5%, both for foreign going vessels and coastal vessels, the statement said, adding that government notifications to give effect to the above proposals will be issued shortly.