Exclusive: GST hike on oil, gas and mining services likely; pros & cons in focus
Professional, technical, and business services linked to petroleum crude, natural gas, and mining operations may soon face a higher GST levy. Sources told CNBC-TV18 that the Centre has proposed increasing the rate on such services from 12% with input tax credit (ITC) to 18% with ITC.
The proposal is expected to be deliberated in detail by the GST Council in its upcoming meeting on 3–4 September, where rationalisation of rates across multiple sectors is a key agenda.
Why the Proposal?
Currently, services provided in support of oil exploration, natural gas drilling, and mining activities attract a concessional 12% GST. These include seismic surveys, geological and geophysical data analysis, drilling operations, mine planning, and other professional or technical assistance.
The government is considering aligning these with the broader 18% slab, which applies to most consultancy, management, and professional services.
Officials argue that such a move would bring parity, reduce disputes, and ensure higher and more consistent tax revenue. “The idea is to rationalise the tax structure, align all professional services, and prevent arbitrage between industries,” a senior government official explained.
Pros of the Move
- Rate Parity: Oil, gas, and mining services will be aligned with the standard GST slab, avoiding classification issues.
- Revenue Gain: The shift to 18% is expected to strengthen GST collections, particularly from high-value contracts in energy and mining sectors.
- Input Credit Neutrality: As ITC remains available, companies will not face tax cascading, reducing the effective net impact.
- Policy Uniformity: Consistent treatment across professional and technical services will simplify compliance.
