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GST for the oil & gas industry: Many imponderables
Dec 28:
The introduction of the GST has impacted the oil sector in many more ways than one.
8The exclusion of petroleum products is just one of the issues
Among the problems plaguing the industry are:
8The allowing of C form for purchase of excluded oil & gas products only for limited manufacturing activities and high VAT rate on excluded petroleum products
8Substantial credit for capital goods to be reversed with 18% interest. There is also difficulty in figuring out assets excluded and included
8ISGT paid is a cost for the oil and gas industry; resulting in increased cost due to dual taxation
8No clarity on whether corporate office, zonal office concepts needed to charge GST on other units
8There are problems with credit reversal in case of service and trading turnover
8No clarity yet on inter-unit billing for transportation through pipeline: Is GST payable in each state for self-supply of transportation of goods to subsequent state?
8Transportation of petroleum products through pipeline falls under residuary entry in Schedule 3 and is taxable at a very high 18%
8GST is payable on stock transfer of goods between two registrations, and that is a problem
8Payment for acquisition of land for laying pipeline or construction of refinery comes under GST
818% GST is levied on goods used for setting up new refineries or expansion of an existing refinery
Click on Reports for more on these issues
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8The exclusion of petroleum products is just one of the issues
Among the problems plaguing the industry are:
8The allowing of C form for purchase of excluded oil & gas products only for limited manufacturing activities and high VAT rate on excluded petroleum products
8Substantial credit for capital goods to be reversed with 18% interest. There is also difficulty in figuring out assets excluded and included
8ISGT paid is a cost for the oil and gas industry; resulting in increased cost due to dual taxation
8No clarity on whether corporate office, zonal office concepts needed to charge GST on other units
8There are problems with credit reversal in case of service and trading turnover
8No clarity yet on inter-unit billing for transportation through pipeline: Is GST payable in each state for self-supply of transportation of goods to subsequent state?
8Transportation of petroleum products through pipeline falls under residuary entry in Schedule 3 and is taxable at a very high 18%
8GST is payable on stock transfer of goods between two registrations, and that is a problem
8Payment for acquisition of land for laying pipeline or construction of refinery comes under GST
818% GST is levied on goods used for setting up new refineries or expansion of an existing refinery
Click on Reports for more on these issues
