Govt reduces GST on bunker fuels

NEW DELHI: India has reduced the goods and service tax (GST) on marine fuel oil, known as bunker fuel, to 5 percent for all vessels, the government said on Wednesday, which should help the country’s fuel sellers compete with other lower-tax ports in Asia.

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

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 the Council posted on Twitter.

“This would provide limited relief to bunker fuel sellers that had seen their market shifting to Colombo,” a trade source said. Like bunkering hubs in Singapore and Fujairah, Sri Lanka levies no taxes on bunker fuel oil.

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

Meanwhile, profits from India’s top firms are expected to have swung back to growth in July-September from a decline in the previous quarter, though economic headwinds are likely to have kept the pace of growth sluggish. The latest results are critical for investors, marking the first quarter since the rollout of GST on July 1 and coming amid a wider retreat in share markets on investor concern about stocks being overvalued.

Forecasts compiled by Reuters show net profits are expected to rise 12.8% in the latest quarter for members of the Nifty, marking a recovery from the 1% fall in net profits in April-June.

That would be less than half the 33 percent increase posted in the January-March quarter and lag the 17.7 percent rise in October-December last year.

Profits are expected to be driven by energy and metals firms benefiting from stronger commodity prices, while telecoms are expected to post weak results due to aggressive competition. Drug makers profits are also likely to have suffered, mostly from regulatory challenges in the key US market.