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News Topical, Digital Desk : Exploration and production of oil and gas will become expensive in the coming times. The reason for this is that the GST Council has decided to increase the tax on these services from 12 percent to 18 percent. The new tax rates will come into effect from September 22. However, the benefit of input tax credit (ITC) will be available in this.
Crude oil and natural gas out of the scope of GST
Prashant Vashisht, Senior Vice President of rating agency ICRA, says that this increase in GST will lead to an increase in the cost of production of crude oil and natural gas. Since crude oil and natural gas are outside the scope of GST, the increase in production cost will increase the burden of taxes.
He said that since April 2025, oil and gas prices have fallen due to global economic challenges and production cuts by OPEC Plus countries, which has reduced the margins of companies. The increase in the cost of production after the reduction in margins will prove to be a double blow for the industry.
Air travel will become expensive, GST increased on non-economy tickets
Air travellers will have to shell out a little more money for premium, business and first class tickets as higher GST rates will apply to these categories. The GST rate on non-economy class tickets has been increased from the current 12 per cent to 18 per cent.
This rate including input tax credit (ITC) will be effective from September 22. The government has clarified that if the journey is done in economy class, then the GST rate will be 5 percent, otherwise the GST rate will be 18 percent. There has been no change in the 5 percent GST on economy class tickets.
Demand for premium economy class seats
With rising air traffic and passengers seeking better flying, airlines are also looking to expand their premium services. The demand for premium economy class seats has also been good in recent years.
Experts believe that higher GST on premium air tickets may encourage more passengers to travel in economy class.
Premium air fares to increase
Karan Aggarwal, director at travel firm Cox & Kings, said higher GST on premium air fares may drive some demand for economy class, but it also creates scope for operators to reconsider value-based premium offerings.
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