The present invention relates to the method for efficient removal of phenolic compounds from wastewater generated from petroleum industry. The method is two-step process. The first step is a pre-treatment process which operates through adsorption-based separation using granular activated carbon. The wastewater in this step is allowed to pass through a column packed with granular activated carbon. In the second step, the pretreated wastewater is subjected to membrane-based treatment. The present invention also relates to the design of a special membrane for effective removal of phenolic compounds from waste water. The membrane formulation includes polysulfone as the main polymeric matrix and carbon dots coated powdered activated carbon as the additive which acts as the active agent for the removal of phenolic compounds. The membranes are designed in two different types, viz., (i) flat sheet and (ii) hollow fiber. The membrane-based separation using the flat sheet membranes can be done with the help of a dead-end filtration set up. In case of hollow fiber membranes, a cylindrical membrane module with a large number of hollow fiber membranes is designed. The membranes are reusable with excellent separation efficiency. The membrane module has proper feed inlet, outlet for permeates and outlet for retentates. This present invention provides removal of ~99% phenolic compounds from petroleum industry wastewater.