The Union Budget has been closely watched by the country’s oil and gas industry in order to gauge the mood of the government and also to align itself with the changing fiscal and policy landscape. A glance at the announcements made, shows that the last four years have been a mixed bag for the oil and gas industry.
Oil and Gas Budget 2015
The union budget 2015-2016 was lacking in action for the oil and gas industry as the government only proposed reduction of customs duty on some petrochemical intermediaries and refrained from announcing any big bang changes in the sector.
The government also rejigged the duty structure for petrol and diesel that had no material impact on the final excise duties paid on the two commodities, with an intention to subsume the quantum of education cess levied on them.
Also, the then Finance Minister Arun Jaitley unveiled a plan to spend Rs 40,000 crore on various infrastructure activities, through excise duty collections made on petrol and diesel. The FM proposed conversion of existing duty on petrol and diesel to the extent of Rs 4 per litre into road cess.
The crash in global crude oil prices since late 2014 had pulled down domestic petrol, diesel prices and gave the government room to raise revenue through additional taxes on fuel without having to worry about stoking inflation
Oil and Gas Budget 2016
Union budget 2016-2017 had been eventful for the oil and gas industry with the government announcing its intention to liberalise the price of domestically produced natural gas, changing oil cess rate at 20 per cent on domestically produced crude oil calculated ad valorem, from Rs 4,500 per tonne earlier.
The budget also gave a sneak peak at the government’s intention to increase the use of Liquefied Petroleum Gas (LPG) in rural and urban India.