Partially addressing concerns related to cascading of taxes for the oil and gas sector, the Goods and Services Tax (GST) Council revised rates for transportation of natural gas through pipeline, offshore works contracts in the meeting on Friday.
The transportation of natural gas through pipeline will attract 5% goods and services tax without input tax credit, and 12% with input tax credit.
The proposal approved by the Council will be notified shortly.
“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 has made recommendations,” the government said in a release on Wednesday.
It proposed that offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles attract 12% GST.
The import of rigs and ancillary goods imported under lease will be exempted from Integrated GST (IGST). “It will be subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions,” it said.
The rate on bunker fuel will be reduced to 5%, both for foreign going vessels and offshore works contract services.