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Centre-states may discuss early inclusion of natural gas into GST fold

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With GST revenue collections making a rebound post the disruptions caused by the second wave of Covid pandemic, the Centre is likely to initiate dialogue with states for inclusion of petroleum products under the new indirect tax fold.

Sources privy to the development said that based on the Petroleum Ministry’s suggestion, the Centre may take up with GST Council the issue of bringing natural gas under the Goods and Services Tax (GST) regime to begin with before the entire oil and gas sector is brought under it.

The 45th GST Council meeting is scheduled on September 17, 2021 at Lucknow. Though the council members will discuss several pending issues such as states compensation, revision of GST rates on Covid essentials, inverted duty structure, the Centre is also likely to take up the case for early inclusion of gas into the new taxation fold.

With revenue position remaining strained due to Covid-19 outbreak, states have been reluctant to consider bringing high revenue generating petroleum products under GST fold. But with GST collections improving substantially this year remaining above the Rs 1 lakh crore psychological-mark in most months of FY22, the Centre feels it is the right time to push for tax reforms in the oil and gas sector as well with the inclusion of gas helping in plan to develop a gas-based economy in the country.

Inclusion of gas would not pose a challenge for the GST Council as it is largely an industrial product where a switchover to the new taxation would not be difficult. The revenue implication for the states is also low in the case of this switchover.

“States are in a fairly better position now with GST revenue hitting over Rs 1 lakh crore-mark for the past few months and Centre has also improved their liquidity position through additional borrowing schemes. This should make phased inclusion of petroleum products under GST easier for the council,” said an official source in the oil ministry.

GST levy on natural gas would help state-run oil companies such as ONGC, IOCL, BPCL and HPCL to save tax burden to the tune of Rs 25,000 crore as they would get credit on taxes paid for inputs and services. Tax credits are not transferable between the two different taxation systems.

The Steering Committee for Advancing Local Value-Add and Exports (SCALE) chaired by Mahindra & Mahindra MD & CEO Pawan Goenka in its report to the commerce ministry has also batted for provision of input tax credit of natural gas to make its prices more competitive. This could happen once it is included in GST.

Sources said Council could consider a three-layered GST structure for gas where residential piped natural gas (PNG) is taxed at a lower rate of 5 per cent, commercial piped natural gas could be taxed at a median rate of 18 per cent, and car fuel CNG could be taxed at a maximum rate of 28 per cent. However, such a proposal has not yet been drafted and it could be put on table after consensus is arrived at inclusion of gas under GST.

Gas sales, including CNG and piped gas supplies, attract VAT ranging from 5-12 per cent.

As part of its efforts to build consensus with the states on GST launch, the government had decided to exclude five petroleum products — crude oil, petrol, diesel, ATF and natural gas — from the list of items placed under GST, but included products such as cooking gas, kerosene and naphtha in the new regime.

International

Striking Iranian regime targets with unprecedented force: Israel Defence Minister

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New Delhi, June 23: Israel’s Defence Minister Israel Katz announced Monday that the Israel Defence Forces (IDF) are currently striking with “unprecedented force” regime targets and governmental repression bodies in the heart of Tehran.

“In accordance with the directives of Prime Minister Benjamin Netanyahu and myself, the IDF is now attacking with unprecedented force regime targets and government repression bodies in the heart of Tehran, including the Basij headquarters, Evin prison for political prisoners and regime opponents, the ‘Israel Destruction’ clock in Palestine Square, the Revolutionary Guards’ internal security headquarters, the ideology headquarters, and other regime targets,” Katz posted on X.

He added, “For every shot fired at the Israeli home front, the Iranian dictator will be punished. The attacks will continue with full force. We will keep acting to protect the home front and defeat the enemy until all war goals are achieved.”

Meanwhile, Iran’s Supreme Leader Ayatollah Ali Khamenei on Monday issued a stern warning in his first reaction following US strikes on Iranian nuclear sites.

“The Zionist enemy has made a big mistake, committed a big crime; it must be punished, and it is being punished right now,” Khamenei said on X, calling the attacks “a big crime.”

The US strikes came after Israeli attacks on June 13 that targetted various locations in Iran, including nuclear and military sites, resulting in the deaths of senior commanders and nuclear scientists.

In response, Iran also launched missile and drone strikes on Israel.

Earlier that day, Israeli Prime Minister Benjamin Netanyahu reiterated the country’s determination to press on with its operations.

“Israel will continue to operate at full tilt in both Iran and Gaza,” he said, adding, “We will not stop this historic operation before we achieve our goals.”

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International

Israel makes new raids on Iran after intercepting missile

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Jerusalem, June 23: Israel conducted a new wave of airstrikes on Iran early Monday, shortly after intercepting a missile fired from Iran, said the Israeli military.

The Israeli Air Force targetted what it described as “military infrastructure sites” in Iran’s Kermanshah province, striking surface-to-surface missile launch and storage facilities, the military said in a statement. More than 15 warplanes participated in the operation.

The strikes came shortly after Iran fired a missile at Israel before dawn and triggered air raid sirens across much of the country. The Israeli military said the missile was shot down, causing no casualties or damage.

The Iranian attack followed US President Donald Trump’s suggestion of a possible regime change in Iran, as US bombers and submarines carried out heavy strikes on Iranian nuclear facilities, Xinhua news agency reported.

Earlier in the day, Iran’s Supreme Leader Ayatollah Ali Khamenei, in his first reaction following the US strikes on Iranian nuclear sites, said that the punishment for Israel, referred to as the “Zionist enemy,” will continue.

Calling the attacks “a big crime,” Khamenei warned of retaliation.

Talking to X, he stated, “The punishment continues. The Zionist enemy has made a big mistake, committed a big crime; it must be punished, and it is being punished; it is being punished right now.”

The US strikes followed Israeli attacks launched on June 13 on various targets in Iran, including nuclear and military sites, killing several senior commanders, nuclear scientists, and civilians, Xinhua news agency reported.

Iran has retaliated with missile and drone strikes on Israel.

Earlier on Sunday, Israeli Prime Minister Benjamin Netanyahu affirmed that Israel would press ahead with its operations. “Israel will continue to operate at full tilt in both Iran and Gaza,” he said, vowing not to be “dragged into a war of attrition.”

“We will not stop this historic operation before we achieve our goals,” Netanyahu stated.

Meanwhile, several reports cited that, a day after US strikes on Iran’s nuclear facilities, the Iranian parliament voted in support of closing the Strait of Hormuz, one of the world’s most critical oil transit chokepoints. Any final decision on retaliation, however, will rest with the country’s Supreme National Security Council..

The US strikes on three Iranian nuclear sites — dubbed “Operation Midnight Hammer” – in Isfahan, Fordow, and Natanz mark the first direct involvement of America in the escalating crisis between Iran and Israel.

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International

Iran executes man accused of spying for Israel

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Tehran, June 23: Iran on Monday executed a man found to be guilty of spying for the Israeli intelligence service, the judiciary of the Islamic Republic reported.

“Mohammad Amin Mahdavi Shayesteh was hanged this morning for intelligence cooperation with the Zionist regime,” stated the judiciary of Iran. (Zionist regime is the term used by Iran for Israel)

Shayesteh was arrested in 2023 for having alleged links to Mossad, Israel’s intelligence agency.

This comes as tensions continue to escalate between Iran and Israel.

Earlier also, on June 14, the Iranian authorities executed a man accused of espionage for Mossad.

“Israeli Mossad spy executed after full criminal trial, the verdict being upheld by Iran’s Supreme Court,” reported Iran’s Mehr news agency.

According to reports, Esmail Fekri was arrested in December 2023 during a complex intelligence operation conducted by the Iranian security agencies.

The execution comes at a time when the war between the two countries continues to intensify and has drawn global attention for threatening the peace of the entire West Asia, a region already facing massive geopolitical turbulence.

Not much information about Fakhri’s arrest, trial proceedings, or specific charges has been revealed, as cases dealing with espionage rarely provide full details, given the sensitivities attached to it.

The Mizan news agency of the Iranian judiciary reported that Fekri sought to send Iran’s classified and sensitive information to Mossad in return for money.

Iran, in late May, had also announced the execution of another individual, identified as Pedram Madani, on the conviction of spying for Israel.

The Iranian media claimed on Sunday that the police in Alborz province in the west of Tehran had arrested two people suspected of having links to Mossad. Later in the day, Israel said it had also arrested two citizens suspected of working for Iran’s intelligence services.

These cases reflect ongoing tensions between Iran and Israeli intelligence agencies, which have been engaged in covert intelligence and counterintelligence operations and have dealt a heavy blow to each other via covert operations.

The two intelligence agencies are engaged in a tit-for-tat campaign combining classic espionage, sabotage, aerial strikes and other covert assassinations.

Several reports claimed that Israeli spies were already on the ground and smuggling weapons into the hostile territory, much before the launch of airstrikes on Tehran.

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