The Ministry of Finance (Department of Revenue) has issued Notification No. 11/2025-Central Tax (Rate) dated September 17, 2025, notifies the increased the GST rate on natural gas operations from 12% to 18%. The amendment, which comes into effect from September 22, 2025, specifically impacts petroleum operations undertaken under various licensing frameworks including petroleum exploration licenses, mining leases granted by the Government of India or State Governments to Oil and Natural Gas Corporation or Oil India Limited, operations under the New Exploration Licensing Policy, Marginal Field Policy (MFP), and coal bed methane operations under the Coal Bed Methane Policy. This rate hike amends the principal notification No. 3/2017-Central Tax (Rate) dated June 28, 2017, by substituting the earlier 12% rate with 18% in the relevant table entry. The decision follows recommendations from the 56th GST Council and marks a significant increase in tax burden for the energy sector. This move could potentially impact operational costs for energy companies and may have downstream effects on fuel pricing and energy costs for consumers.
The notification reflects the government’s fiscal policy adjustments in the energy sector, representing a substantial 6 percentage point increase in GST rates for natural gas operations.
In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 3/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 675(E), dated the 28th June, 2017, namely:-
In the said notification, in the TABLE, against S. No. 1, for the entry under column (4), the entry “9%” shall be substituted.
This notification shall come into force on the 22nd day of September, 2025.
Note: Similar notification has been brought under the UTGST Act, 2017 vide No. 11/2025-Union Territory Tax (Rate) dated September 17, 2025 and under the IGST Act, 2017 vide No. 11/2025-Integrated Tax (Rate) dated September 17, 2025.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/09/CBIC-N.No_.-11-2025-CT-IG-UT.pdf
