News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« Service Tax »
 Offer income tax benefits on Senior Citizens Savings Scheme, urges SBI Research
 Paying your income tax may soon become as easy as swiping a card at a shop
 In income tax rule change, govt considers tweaking dividend distribution tax
 No documents are needed to file ITR for agricultural income below ?5 lakh
 Introduced in 2017, the Goods and Services tax (GST) is a destination based consumption tax subsuming in itself, the erstwhile taxes like sales tax, service tax, excise etc. Under the GST
 Income Tax alert! Last date to do this work is October 31, check all details here
 Income tax on gains from stocks, equity mutual funds set to be revamped
 You can save tax on up to Rs 17,000 savings account interest: Here's how
  Communication to the Central Excise/Service Tax Taxpayers on migration to GST
 Don’t let the tax scrutiny spoil happy returns
 Government launches Faceless e-assessment scheme for taxpayers

The Goods And Services Tax (GST)regime can integrate petroleum sector
November, 16th 2010

There is no parity in VAT rates applicable to different fuel products. Petroleum products in India are considered as sensitive and accordingly, there is co-existence of high taxes and subsidies.  Thus, the multiplicity of taxes, differences in tax base, variations in calculation of tax and frequent changes in taxes create unnecessary complexities for the petroleum industry.

The Goods and Service Tax (GST) regime offers an opportunity to integrate the petroleum sector with the tax regime of other sectors of the economy. Though meetings of the Empowered Committee (EC) of State Finance Ministers with the Union finance minister have achieved consensus on some issues related to implementation of GST, strong differences still exist on inclusion of petroleum under GST. It appears that the Centre is in favour of keeping petroleum sector within GSTs ambit as opposed to the states, who are firmly against any such move, lest they lose control over the significant revenue contributed by this sector.

A significant drawback of the current indirect tax regime is the large scale cascading of tax. Tax cascading essentially occurs when there is a denial of credit of input/input services used for rendering a supply. This blockage of input taxes creates tax cascading, leading to economic distortions and non-neutralities in the application of tax.

In case of exploration and production sector, service tax incurred on input services cannot be utilised as there is no output liability on crude oil and natural gas. The non-deductible service tax gets embedded in the cost of crude oil and natural gas supply, which in turn gets embedded in the cost of other petroleum products, resulting in tax cascading.

The petroleum sector includes oil exploration and production, refining, transportation and pipelines, and distribution and marketing. At all these stages, substantial inputs of goods and services are acquired on which GST would be paid. Hence, coverage of petroleum sector under GST is bound to address the basic problem of tax cascading in petroleum sector.

GST was initially proposed to be introduced April 2011 onwards. However, since consensus has not been achieved between the Centre and states, the implementation from April 2011 seems implausible. What is required is a solution, which would not only help the Centre to meet its objectives but also not pose as a major setback to the states.

As recommended by the 13th Finance Commission, a probable solution is the inclusion of all petroleum products under GST and a supplementary excise duty with restricted credit on emission fuels. This would not only benefit the Centre and the states but also free the sector from a complex and inefficient tax structure and integrate this sector with the other sectors of the economy.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions