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GST on bunker fuel to be lowered to five per cent

The government has reduced the Goods and Service Tax (GST) on Marine fuel oil, known as bunker fuel, to 5 percent for all vessels, which should help the country’s fuel sellers compete with other lower-tax ports in Asia. Ports like Cochin have entered this business in a big way had to face severe competition from Colombo and Singapore ports since the taxes levied by these countries on bunker fuel is practically nil.

India’s nationwide GST taxed bunker fuel sales at 18 percent when it was implemented on July 1. The GST replaced state value-added taxes that were typically between zero and 5 percent.

India’s GST Council decided to reduce the tax on the bunker fuel sales after an October 6 meeting where it recommended assessing GST rates for the bunker fuel sales, natural gas transportation and for offshore oil and gas field services, according to the statement from the Council posted on Twitter.

This would provide limited relief to the bunker fuel sellers that had seen their market shifting to Colombo during the past few months since the GST became operational.

For the offshore oil and gas field services, the Council set the GST at 12 percent. Natural gas transported through a pipeline will have a GST of 5 percent without so-called input tax credits, or 12 percent if the tax credits are included, according to the statement.

 

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