|
|
|
GST credit against excise duty on petroleum products
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 24 Jan, 2020
In a big relief to the oil sector, government may allow producers of
petroleum and natural gas to claim credit for GST on all inputs, input
services and capital goods being paid by them even though the output
petroleum products including petrol, diesel, ATF remain outside the new
indirect tax framework.
Sources said that government is looking
at an industry proposal to amend CENVAT rules that will allow petroleum
producers to claim credit on all taxes paid on inputs under the GST
system and get a set-off on these duties against output excise duty paid
on five petroleum products that continue to remain outside GST.
"This
is a very good proposal that would allow relief from additional tax
burden to the tune of Rs 25,000 crore on oil marketing companies at
present. The problem is coming as sector's input are in GST system where
tax set-off is available but final product is outside the GST system
where credit on inputs is not allowed. Tax credits won't be transferable
between the two systems," said an executive of public sector oil
company asking not to be named.
Tax credits on products not in
GST system may create accounting complications, but government sources
said this could be done as a temporary measure if the products were
expected to come under the new indirect tax system soon. An announcement
about the proposed changes may be made in the coming budget.
As
of now, five petroleum products viz. petroleum crude, motor spirit
(petrol), air turbine fuel (ATF), high speed diesel and natural gas are
included in GST, but is governed under existing Central Excise Act as
well as State VAT and Central Sales Tax Act, till GST Council recommends
the same for coverage under GST.
In the absence of a consensus
among states, the five products remain outside the GST fold.
Accordingly, input tax credit of GST paid on procurements is not allowed
against the output tax liability to the supplier of the said products
and is an additional cost for the producers of oil and gas.
"It's
a matter of time now before petroleum products are also included under
GST. It could happen gradually with gas and ATF being placed under GST
first before other products move there. Till that time, if a tax set-off
mechanism involving excise duty paid on petroleum products is evolved,
it would work best for the sector," said a government official privy to
the development.
The GST Council could consider bringing natural
gas in the GST net ahead of other four petroleum products. Inclusion of
gas would not pose a challenge for the Council as it largely an
industrial product where a switchover to new taxation would not be
difficult. The revenue implication for the states is also low in the
case of this switchover. This could be followed by including ATF in GST
fold.
Ministry of petroleum and natural gas has been pushing for
inclusion of petroleum products in the indirect tax system for some
time now as it feels that this would bring down volatility in its retail
pricing that is constantly under pressure on rising global oil prices.
Industry
body FICCI has also pitched for provision of credit of GST against
excise duty on petroleum products as a temporary measure till all
products get into the indirect tax system.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|