Oil firms urge India to bring products under GST net

Oil companies including Shell, BP, Essar, Oil and Natural Gas Corp. (ONGC) and Nagarjuna Oil met with Finance Secretary Ashok Chawla and made a case for bringing in all petroleum products under the goods and services tax (GST) so that they could avail of the input tax credit. Currently, as per the Empowered Committee’s first discussion paper, crude oil, motor spirit, including aviation turbine fuel (ATF), high speed diesel (HSD) and natural gas would be kept outside the GST. While the GST rates are expected to be moderate, oil companies would benefit on account of the input tax credit mechanism. However, states are not very keen to keep these items within the GST purview as state taxes on petroleum products comprise as much as 30% of total state revenue. Oil producing (or origin states) would stand to lose massively under the scheme because GST is a destination-based tax. (September 28, 2010)