GST 2.0: What Yesterday’s Announcement Means for Oil & Gas

A Defining Shift

On September 3, 2025, the GST Council announced a landmark reform, streamlining the structure into just two slabs — 5% and 18% — with a higher 40% bracket reserved solely for sin and luxury goods.

The move has been widely welcomed across industries as a step towards clarity, simplicity, and ease of doing business. Effective from September 22, 2025, this reform reduces confusion around multiple tax rates and provides a more predictable environment for planning and investment.

Immediate Impact on Oil & Gas

For the oil and gas sector, the changes have limited direct effect in the short term:

Core petroleum products such as petrol, diesel, and crude continue to remain outside the GST framework, still subject to excise duties and state VAT.
The announcement did not explicitly mention natural gas, city-gas distribution, or CNG. These fuels have historically remained outside GST and, until further clarification, appear to be governed under the existing indirect tax regime.

Why This Matters for the Future

Although the announcement does not directly change the sector today, it signals a strong intent toward eventual inclusion.

Industry experts have long advocated for bringing natural gas and CNG under GST to create uniformity and improve transparency. The simplified two-slab structure lays important groundwork for such a transition.

If natural gas and CNG are eventually brought into the GST net, the impact could be transformative. A potential 5% rate for city-gas services would:

Make clean energy options more affordable for end-consumers
Enable a seamless input tax credit chain for infrastructure providers
Improve cost-efficiency and compliance across projects

TDFM Inffrastructure Limited’s Perspective

At TDFM Inffrastructure Limited, we see GST 2.0 not just as a tax reform but as a forward-looking policy shift.

While our immediate processes remain unchanged, the simplified structure strengthens confidence in India’s regulatory framework. It demonstrates that the government is committed to creating a more business-friendly ecosystem, which in turn supports long-term investments in infrastructure-heavy industries like ours.

We believe that the eventual inclusion of natural gas and city-gas services under GST would unlock multiple benefits:

Greater transparency in tax flows
Predictable costs for infrastructure projects
Improved affordability of CNG for end-consumers
Simplified compliance for businesses and stakeholders

Looking Ahead

GST 2.0 is an important milestone in India’s tax journey.

While it does not directly touch the oil and gas sector today, it creates the possibility of a simpler, cleaner, and more equitable tax environment in the future.

For TDFM Inffrastructure Limited, the message is clear: stay prepared, stay adaptive, and stay ahead of policy changes. As leaders in city-gas infrastructure, we remain committed to aligning with evolving reforms and ensuring that when GST eventually extends to natural gas and CNG, we are ready to harness the benefits for our partners, stakeholders, and the communities we serve.

At TDFM Inffrastructure Limited, we believe reforms like GST 2.0 do more than change tax structures — they pave the way for industries to grow with greater efficiency, clarity, and confidence.

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