While the strategic petroleum sector, including oil and gas, continues to remain outside the new GST indirect tax regime that replaced a 70-year-old system, the industry did manage in 2017 to switch over to a new exploration regime that gives producers marketing and pricing freedom.
The petroleum industry has been pushing for its inclusion in the Goods and Services Tax (GST) structure so as not to be deprived of the benefits of input credit -- a novel feature whereby goods and service providers get the benefit of input tax credit for the goods used, effectively making the real incidence of taxation lower than the headline rate.
The Centre is keen to bring under GST products like petrol and diesel that generate considerable reveue for the states, which they are loathe to surrender. Finance Minister Arun Jaitley provided this remarkable insight about the functioning of the Council that he heads.
"Everything has been achieved by consensus in the best spirit of cooperative federalism. There has been no politics, even from states which are controlled by opposition parties," he told a gathering of industry leaders here.
During the course of the year on the other hand, India conducted its first auctions and, consequently, awarded the first licences for hydrocarbons exploration under a new revenue-sharing model, as opposed to the previous profit-sharing one, and the successful bidders had complete marketing and pricing freedom.
In the early part of the year, the government approved 31 contracts for exploration of small oil and gas contract areas under the Discovered Small Fields (DSF) Bid Round. As many as 46 contract areas designated for 67 discovered small fields across nine sedimentary basins were on offer, bids for which came in from majors like Cairn IndiaBSE 0.90 % and Hindustan Oil Exploration Co, along with from five smaller foreign firms.