|Mr. Rajiv Bahl, Director (Finance, Taxation and Legal), FIPI welcoming the participants.|
|Mr. Hemal Zobalia, India Tax Leader, Deloitte India giving background on the study on GST being carried jointly with FIPI|
|Ms Bela Mao, Partner, Deloitte giving the presentation.|
|Dr. R. K. Malhotra, DG, FIPI delivering the concluding remarks.|
|Session in progress|
The Federation of Indian Petroleum Industry (FIPI) organised a CEO/CFO Round table on GST on Monday, 26 August, 2019 at Hyatt Regency, New Delhi. The objective of the Roundtable was to bring all oil and gas industry CFOs under one roof and seek their inputs on the FIPI’s ongoing study on impact of GST on the oil and gas sector.
The Goods and Services Tax (GST) was introduced by the Government of India in July 2017. The new tax regime is the single largest tax reform in the history of independent India and proved to be transformative for individual businesses and increased the country’s tax base manifolds. However, five key petroleum products crude oil, natural gas, ATF, MS and HSD have not been included under the GST regime. The non-inclusion of five petroleum products has resulted in huge stranded input tax credit for the oil and gas companies, which is proving detrimental to their operation and future investment capabilities. In this regard, FIPI has been at the forefront advocating for the earliest inclusion of the sector under the GST regime at various levels in the Ministry of Petroleum and Natural Gas (MoPNG), Ministry of Finance (MoF), GST Council and State revenue and finance ministries. In this direction on the request of MoPNG, FIPI commissioned a study on the impact of non-inclusion of the sector under GST with Deloitte to substantiate and share the financial impact with the policy makers. The findings of the report will be further advocated with the Government with the view to include the core petroleum products under GST at the earliest.
Delivering the welcome address at the Round Table, Mr Rajiv Bahl, Director – Finance, Taxation and Legal, FIPI recounted that non-inclusion of oil and gas sector under GST has been difficult for the entire industry and that all major companies in the sector have huge amounts stranded taxes in the form of input tax credit. He mentioned that due to the relentless efforts of FIPI and the industry, many of the recommendations have already been accepted by the Government. He sounded extremely positive that the findings of the report will further the industry’s advocacy efforts and will present a stronger case for earliest inclusion under GST to the policy makers.
The findings of the ongoing study were presented to the participants by Ms Bela Mao, Partner, Deloitte. In her presentation, she elaborated the data collection methodology and the key findings of the report to the participants. She presented the methodology for arriving at the Revenue Neutral Rate (RNR) for each product and how each state and centre would be affected if these were to be brought under GST at these rates.
During open discussion, the participants offered their advices and recommendations to be included in the report to make it more targeted. The participants were of the opinion that after the completion of the report, a clear roadmap should be drawn to engage with the policy makers so as to ensure maximum impact.
In his concluding remarks, Dr R K Malhotra, Director General, FIPI expressed satisfaction with the outcomes of the report and informed the participants that the final findings and recommendations of this report, after the incorporating the views of industry members, will first be shared with MoPNG and will consequently be advocated with other Ministries and State Governments.
The Round Table discussions turned out to be extremely successful in collecting industry inputs for the report. The Roundtable witnessed overwhelming participation from CEOs, CFOs and other key decision makers from oil and gas companies, operating across the value chain.