PTI New Delhi

The recent rationalisation of Goods and Services Tax (GST) is set to bring both relief and challenges across India's key sectors, according to the ICRA press release. However, in the oil and gas sector, the move could increase pressure. 

Prashant Vasisht, Senior Vice President and Co-Group Head, ICRA Ltd., said, "GST has been increased on exploration, development and production of oil and gas from 12 per cent to 18 per cent which would lead to increase in the cost of production of crude oil and natural gas... moderating realisations and increase in cost of production would be a double whammy for the Upstream industry and could lead to some assets not being developed on account of poor returns."

  On the other hand, Aditi Nayar, Chief Economist at ICRA Ltd., said the move comes at an important time for the economy. "The GST rationalisation is a welcome and well-timed move, and its positive implications for consumer demand and producer sentiment will help offset a part of the negative impact of the evolving US tariffs and penalties on India's GDP growth. Any revenue foregone by the Centre and the states would effectively need to be compensated through other revenue streams or expenditure rationalisation. Private sector capex decisions may also get a boost in domestic consumption-oriented sectors.