In his opening remarks, Mr. Vivekanand, Director (Finance, Taxation and Legal), FIPI, welcomed all the panelists during the budget analysis session organized by FIPI. He said that the honorable Finance Minister laid down nine priorities of the Budget Viz-Productivity and resilience in agriculture, Employment and skilling, Inclusive Human resource development and social justice, Manufacturing and services, Support for promotion of MSMEs, Urban development, Energy security, Infrastructure, Innovation and research and development.  Further, he highlighted that Indian economy showed resilience to global challenges, with real GDP growth rate of 8.2 percent in FY 24, exceeding 8 percent mark in three out of four quarters of FY 24. With robust economic expansion, the Indian economy has been on the course of fiscal consolidation with fiscal deficit brought down from 6.4 per cent of GDP in FY23 to 5.6 per cent of GDP in FY24 and aims to achieve 4.9% of GDP in FY 25 and at 4.2% of GDP in FY 26.

Also, he highlighted that despite global supply chain disruptions and adverse weather conditions, domestic inflationary pressures have moderated in FY24 with retail inflation declined to 5.4 per cent in FY24 from 6.7% in FY 23. He also said that the growth of the economy is supported by higher capex on infrastructure expansion with an infrastructure budget allocation of Rs. 11, 11,111 crores. In continuation to government strategy to sustain high resource-efficient economic growth, along with energy security in terms of availability, accessibility and affordability, energy transition remains a key focus area in the Union budget with solar, nuclear and pump hydro storage getting a major policy push by the government. He highlighted that the PM Surya Ghar Yojana announced during the Interim Budget held in February 2024 garnered great reception with over 1.28 crore registrations and 14 lakh applications already. Further, expansion in the list of exempted capital goods used in manufacture of solar cells and panels in the country will further boost the renewable industry in India. Also, a roadmap will be prepared to shift "hard to abate" industries, such as shipping, aviation, iron and steel, and chemicals, from focusing on energy-efficiency targets to emission targets. A significant announcement was the investment grade energy audit of traditional micro-small industries in 60 clusters wherein financial support will be provided for shifting them to cleaner forms of energy. The scheme will be replicated in another 100 clusters in the next phase.

Setting the context for the session, Ms. Neetu Vinayek, Partner, EY, presented the results of the pre-budget survey that was conducted by FIPI prior to the release of Union Budget 2024-25. While the pre-budget survey highlighted the major positive outcomes such as reduction in fiscal deficit; capex expansion; and measures laid by government on energy transition, it also highlighted the major misses such as application of GST on natural gas and the extension of concessional base tax rate of 15% for new domestic manufacturing companies. Further, she highlighted the critical aspects mentioned in the Economic Survey. With robust GDP estimated at 6.5% -7% in FY 25, India’s macroeconomic fundamentals viz- inflation, fiscal deficit as well as forex reserves have also shown stable performance during FY 24. She also highlighted that the Indian stock market was among the best-performing markets. Additionally, she provided an overview of how India's GDP growth stands out in comparison to other global economies, the objectives for the fiscal deficit, and the growth in the government's revenue generation and spending.  

Ms. Neetu Vinayek then touched upon the major policy announcements in the Union Budget 2024. She highlighted that a policy paper will be released outlining suitable energy transition strategies that harmonize the needs of employment, economic development, and environmental sustainability. For the infrastructure sector, the Budget maintains the same amount of allocation of Rs. 11.11 lakh crore (3.4% of the GDP) as announced in the interim budget.

With a focus on the employment and skilling sector, she said that the Budget provided a major boost by providing for hiring new employees by reimbursing the employers EPFO contribution of up to Rs. 3000 per month for 2 years. Further, for enhancing the ease of doing business - strengthening of National Company Law Tribunal (NCLT) and setting up additional tribunals was proposed along with Jan Vishwas Bill 2.0. Under manufacturing and services sector, the budget proposed Digital Public Infrastructure application development in credit, e-commerce, education, health, law, and justice, MSME, and urban governance- which will ensure transparency and availability of data.

Regarding direct tax proposals announced in the budget, Ms. Neetu Vinayek mentioned that the budget was presented with the focus towards simplification of the income tax law. She highlighted the proposals for the individual taxation viz. changes in income tax slabs under Concessional Tax Regime and an increase in the standard deduction to Rs. 75,000 under the Concessional Tax Regime resulting in tax benefit of Rs. 17,500. 

Mr. Hiten Sutar, Partner EY highlighted the corporate tax amendments. He said that with an intent to rationalize the capital gains taxation, the tax rates for short-term capital gain tax on STT paid equity shares will be raised from 15% to 20% while the long-term capital gains tax on all category of assets will be reduced to 12.5%. Further he highlighted the change in the holding period of different classes of assets from 36 months to 24 months. The Budget also proposed for removal of indexation benefit for all category of assets, rationalization of TDS rates on certain payments, reduction in period of reassessments, removal of prosecution provision for delay in deposit of TDS, etc. He highlighted that in a welcome move, the corporate tax rate for foreign companies has been reduced from 40% to 35%. Moreover, the equalization levy of 2% has also been abolished with the intent to bring in BEPS 2.0 measures.

. In a move to widen the tax base, w.e.f. from 1st October 2024, the buy-back tax will be abolished and the amount received by the shareholders will be taxable in their hands as “deemed dividend’’. Lastly, he briefed about the Vivad se Vishwas Scheme 2024 which provides opportunity to settle pending Income Tax Disputes.

Ms. Uma Iyer, Partner, EY highlighted the provisions made under the indirect tax. She said that certain additional goods including sub-sea valves, onshore production system like structures, Articles of Copper, Special lubricants etc., have been exempted for petroleum exploration operation under S No 404 of Notification no 50/2017-customes). The customs exemption under S No 404 (for petroleum exploration operations) is proposed to be extended till 31 March 2026 only. Further, the initial period for re-export of articles of foreign origin vessels and aircrafts imported into India for repairs were extended from 6 months to 1 year. She also mentioned about introduction of 74 A under GST proposals which talked about the determination of tax short paid/unpaid/excess refunds or ITC- wherein the single limitation period of 3.5 years for all cases is proposed. Further, the maximum amount of pre-deposit for filing appeal with appellate authority is reduced from Rs. 25 crores to Rs. 20 crores and the amount of pre-deposit for filing appeal with the Appellate Tribunal reduced from 20% with a maximum amount of Rs. 50 crores (CGST and SGST each) to 10% with a maximum of Rs. 20 crores (CGST and SGST each). The other amendment included – three-month time for filing appeals before GSTAT to start from a date to be notified. Further in terms of resolving past tax controversy, there would be waiver of interest and penalty for litigations for the period 1st July 2017 to 31st March 2020. This benefit will be available for matters under Section 73. Lastly, she talked about the reverse charge wherein the time of supply is the date of payment or the date of self-invoice to be considered for availability of credit.

The presentation on budget was followed by ‘Panel Discussion on Union Budget 2024-25, focusing on the outcome for oil and gas companies in the Union budget. The panel comprised of Shri A K Tiwari, Member, PNGRB; Shri Anuj Jain, Director (Finance) IOCL; Ms. Pomila Jaspal, Ex-Director (Finance) ONGC; Shri Vinod Tahiliani, CFO RBML The panel discussion was moderated by Ms. Neetu Vinayek, Partner, EY.

During the discussion, the panelists highlighted the key positive outcomes of the Union budget in terms of increased focus on energy transition, infrastructure investment; and addressing issues on skilling & employment. The panelist welcomed the incentives provided to new sources of energy such as facilitating rooftop solar though PM Surya Ghar Yojana, exemption on capital goods used in manufacture of solar panels, advancement in nuclear energy technologies thereby bolstering the energy mix in India; etc.  Further, implementation of energy efficiency measures by conducting energy audit of micro-small industries in 60 clusters is considered a positive step towards energy sustainability.

The panelists were of the view that given the amount of raw material available in terms of agricultural residue, animal manure etc., biogas would play a significant role in the India’s transition towards energy sustainability. With Union budget notification on allocation of Rs. 994.50 crores to support the pipeline infrastructure for injection of biogas into CGD network along with mandate set out by government on attaining blending of CBG with CNG for transport and PNG for domestic use at 1% by 2026 is a welcome step. Further, it was mentioned that a proper trading mechanism should be developed for commercial trading of CBG certificates.  This will not only ensure viability of CBG plants, but with domestic production in use, the import of LNG will reduce drastically.

Further, the panelists highlighted that to attain carbon neutrality by 2070, CCUS plays an important source of decarbonization in hard to abate sectors especially in energy sector. They said that a wide variety of opportunities to convert the captured CO2 to different value-added products is available like green urea, food, and beverage form application, building materials, chemicals, and enhanced oil recovery (EOR), thus contributing substantially to a circular economy. Further, they mentioned that government support in terms of Prime Minister’s Science, Technology & Innovation Advisory Council in setting up a national portal for CCUS projects and NITI Aayog’s inter-ministerial technical committee for discussing different aspects of CCUS namely, shows that how keen the government is in propelling the growth of CCUS in India.

The panel had a consensus on inclusion of all petroleum products including natural gas under GST to avoid losing significantly in terms of input tax credits due to its non-inclusion under GST.  Further, they highlighted that more incentives in the upstream segment need to be provided for increasing domestic oil and gas production, to curtail on energy imports.

Ms. Uma Iyer and Ms. Neetu Vinayek from EY conducted the Q&A session and provided their views and opinions on various queries posted by participants.

In the concluding remarks, FIPI thanked all the panelists and the subject matter experts for providing their insights on the Union Budget 2024-25 and its implications on the oil & gas industry and the economy.

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