Petroleum should be a part of GST. Multiple taxation should be stopped on Petroleum

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Union Petroleum Minister Dharmendra Pradhan on Monday expressed the hope that petroleum products would soon come under the goods and services tax (GST).


At present, while products such as kerosene, naphtha and liquefied petroleum gas are part of the GST, five items — crude oil, natural gas, aviation fuel, diesel and petrol — do not come under the GST umbrella.


“We expect all petroleum products to be part of the GST in a few days. We will push for that. States have concerns about what will happen to their service tax and VAT. But I believe that the GST will be advantageous for states,” Pradhan said, speaking at the contract-signing ceremony for blocks awarded under the recently concluded discovered small field (DSF) auctions.


India on Monday signed contracts with 22 companies, which won 31 contract areas in the recently concluded hydrocarbon auctions. This is likely to bring in revenues of Rs 46,400 crore. Of this, the gross royalty collection and state royalty collection are expected to be around Rs 5,000 crore and Rs 2,100 crore, respectively.


The revenue share of the government from these fields is expected to be Rs 9,300 crore. The DSF bidding round was launched on May 25, 2016. Initially, 134 e-bids were received for 34 contract areas with participation from 47 companies. 


The cumulative peak production from the awarded fields is expected to be around 15,000 BoPD (barrels per day) of oil and 2 mmscmd (metric million of standard cubic metres a day) of gas over their economic life. 


“We are in the process of launching the second round of small field auctions. In addition to this, we are planning to bring in production enhancement contracts for petroleum sector PSUs,” Pradhan said. 


D S Rajput, chairman and managing director of Sharjah-based South Asia Consultancy, the only foreign player that won a block under DSF, said, “The advantage for this round was that no prior experience was needed. However, for DSF round two, they are asking for one-year experience in the sector.”


Meanwhile, two pet projects of Prime Minister Narendra Modi — Pradhan Mantri Ujjwala Yojana (PMUY) and Pradhan Mantri Urja Ganga — are set to be extended to Nepal. 


“We are planning to extend the reach of the PMUY in Nepal. At the same time, talks are also there to push the Urjja Ganga pipeline beyond borders from Gorakhpur to Amlekhganj,” said Dharmendra Pradhan, minister of petroleum and natural gas. The Rs 12,940 crore Urja Ganga project will pass through five states — Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha — covering 2,619 km in 49 districts.


The PMUY was launched on May 1, 2016, at Ballia in Uttar Pradesh with a target of providing LPG connections to 50 million below-poverty-line families in three years. The government is providing Rs 1,600 per connection. The scheme is set to provide 20 million connections by the end of this month, surpassing the target of 15 million for the financial year.

State-run IndianOil Corporation is also in talks to extend its LPG pipeline project from Raxaul in Bihar to Amlekhgunj in Nepal at a capacity of 1.3 million tonnes per annum. 

The above reform is a long pending/debated topic towards an Economic Reform & above implementation should be at priority with petroleum into the Ambient List initially.
Reasons Below

 

  • Petroleum been a driving force to Economy should be included at initial stages.
  • Multiple taxes on Petroleum from Central and State Govt will be stopped.
  • There is a minimal contribution of states in petroleum products.
  • The VAT difference leads to interstate smuggling/sales cut of RO,wherein the OMC never help or raise thier voice against such interstate smuggling/open selling in market & run & violate the responsibility under "Control Order",stating that we are loosing in one state & wherein we are gaining in another, now where the dealer's fault is ?
  • The sales & requirment of states in petroleum products, will be as per Geographical Area & not over the VAT percentage.
  • Currently due to above the RO at border are in different VAT are suffering a huge sales loss & are on the urge of closure & this will make an underutilized assets productive for OMC & public money will be properly utilised.
  • Above smuggling & storage & selling of petroleum products in open market leads to a threat to a community & an injustice to high invested sites & supervising dealer's as on date for RO operation.
  • Multiple taxation of petroleum products will be stopped & rates will come down & an justice can be done in form of equal rate for customer PAN India

 



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