New Delhi, September 14 (Agency)
The Goods and Services Tax (GST) Council meeting on September 17 is likely to consider bringing petrol and diesel under GST. This would be a move that would require tremendous ‘compromises’ on the revenue front by the central and state governments. Both the Center and the states get huge revenue through taxes on these products. Finance ministers of the states are also included in the GST Council headed by Finance Minister Nirmala Sitharaman. The council meeting is being held in Lucknow on Friday.
Currently, vehicle fuel prices are at a record high in the country. In such a situation, this step can be taken to eliminate the effect of tax on tax in the case of petrol and diesel fuels. At present, the states do not levy VAT on the cost of production of petrol, diesel, but first the center levies excise duty on their production, then the states levy VAT on it. The Kerala High Court, during the hearing of a petition in June, had asked the GST Council to take a decision on bringing petrol and diesel under GST. Sources said the court has asked the council to do so. In such a situation, it can be considered in the meeting of the Council. The GST regime was implemented in the country from July 1, 2017. Central tax and state duty were subsumed in this. But petrol, diesel, ATF, natural gas and crude oil were kept out. This is because the Center and the states get huge revenue from taxes on these products.
Benefit to states with higher sales
GST is a consumption based tax. In such a situation, those states will benefit more by bringing petroleum products under it, where these products will be sold more. Those states which are production centers will not benefit much. For example, Uttar Pradesh and Bihar will get more revenue due to higher consumption due to their large population. At the same time, the revenue of producing states like Gujarat will be less in the new system.