Higher tax may inflate cost of oil & gas hunt

Net impact on coal, thermal power positive

- ARUNIMA BHARADWAJ

THE INCREASE IN the GST on oil and gas EDP (exploration, development, and production) contracts from 12% to 18% could hit upstream operations by inflating production costs and creating stranded taxes, analysts feel.

The higher tax has come at a time when realisations of oil producers have weakened due to global market pressures.

However, while GST on coal has been hiked from 5% to 18%, this will be more than offset by the removal of compensation cess component (national calamity contingent duty) on the fuel.