Early inclusion of natural gas into GST fold likely

By Subhash Narayan New Delhi, Jan 6 : With states coming on board over GST compensation issue, the Centre is gearing up to get their consent over inclusion of petroleum products under the new indirect tax fold.
Sources privy to the development said that based on Petroleum Ministry’s suggestion, the Centre may take up with GST Council the issue of bringing natural gas under the Goods and Services Tax (GST) regime to begin with before entire oil and gas sector is brought under it.
Though the dates for next GST Council meeting is yet to be finalised, finmin sources said its due and may take place anytime after the budget presentation.
With revenue position already strained due to Covid-19 outbreak, states have been reluctant to consider bringing high revenue generating petroleum products under GST fold. But the dual tax treatment is affecting the sector and hampering government’s plan to develop a gas-based economy in the country.
Sources said that with this in mind, a phased approach to inclusion of petroleum products under GST may be adopted with natural gas falling first in the queue.
Inclusion of gas would not pose a challenge for the GST Council as it is largely an industrial product where a switchover to the new taxation would not be difficult. The revenue implication for the states is also low in the case of this switchover.