{"id":35763,"date":"2018-11-01T11:41:26","date_gmt":"2018-11-01T06:11:26","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35763"},"modified":"2018-11-01T11:41:26","modified_gmt":"2018-11-01T06:11:26","slug":"profit-petroleum-may-be-exempt-from-levy-of-gst","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/profit-petroleum-may-be-exempt-from-levy-of-gst\/","title":{"rendered":"Profit petroleum may be exempt from levy of GST:"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/profit-petroleum-may-be-exempt-from-levy-of-gst\/article19447784.ece\"><span style=\"font-weight: 400;\">Profit petroleum may be exempt from levy of GST<\/span><\/a><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><b>Context:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The oil and gas exploration and production business is likely to get a boost following a proposal to exempt the profit petroleum paid to the Centre from the Goods and Services Tax (GST).<\/span><\/p>\n<p><b>Introduction:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The production sharing contracts (PSCs) signed for exploration and development of oil fields require operators to pay a pre-determined share of the surplus petroleum output to the Centre as a form of royalty.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Presently, such profit petroleum is subject to GST as it has been construed as a payment made by firms for a service.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0The levy of GST doesn\u2019t appear to be sync with the PSCs signed under the New Exploration Licensing Policy<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> The proposal to rectify this policy is likely to be taken up by the GST Council at its next meeting in September.<\/span><\/li>\n<\/ul>\n<p><b>Key points:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> The PSC allows contractors to recover all expense incurred in exploration, development, production, and this includes costs of all inputs and indirect taxes paid thereon.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0\u00a0Operators are not allowed to recover the profit petroleum paid to the government as a cost under the PSC.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> Industry bodies like CII had made several representations on the issue to the Centre, contending that paying a share in profit petroleum to the government is a profit-sharing arrangement rather than a payment for service.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0Profit petroleum is a bidding parameter for player under the NELP regime and they are required to share varying amounts of the surplus oil drilled beyond a particular threshold with the government.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> The government is also likely to clarify that \u2018cost petroleum\u2019 which is the value of petroleum that a contractor can take in order to recover all contracts costs for exploration and royalty incurred during a year could be taxable.<\/span><\/li>\n<\/ul>\n<p><b>New policy:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0The government recently has approved HELP (Hydrocarbon Exploration and Licensing) Policy which will replace the existing NELP.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> Under the new regime revenue-sharing arrangement is proposed.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0The new policy HELP replaces the previous policy regime for exploration and production of oil and natural gas, known as New Exploration Licensing Policy (NELP).<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> Under the new regime will be a uniform licensing system which will cover all hydrocarbons, under a single license and policy framework.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Profit petroleum may be exempt from levy of GST: Context: The oil and gas exploration and production business is likely to get a boost following a proposal to exempt the profit petroleum paid to the Centre from the Goods and Services Tax (GST). Introduction: The production sharing contracts (PSCs) signed for exploration and development of&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/profit-petroleum-may-be-exempt-from-levy-of-gst\/\">Continue reading <span class=\"screen-reader-text\">Profit petroleum may be exempt from levy of GST:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35763","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704856831},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=35763"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35763\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}