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No GST on Petrol and Diesel Yet, Says CBIC Chairman Citing Revenue Concerns
Petrol-Diesel GST: Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal has said that it is not possible to bring petrol and diesel under the purview of Goods and Services Tax (GST) right now.
There is no such possibility that price of petrol and diesel will come down due to purview of Goods and Services Tax (GST). Actually, Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal has said that it is not possible to bring petrol and diesel under the purview of Goods and Services Tax (GST) right now. The main reason for this is the huge revenue income to the central and state governments from these products.
Aggarwal told IANS that Central Excise Duty and Value Added Tax (VAT) are currently applicable on petrol and diesel. Both these products provide substantial revenue to the states through VAT and to the central government through excise duty. He said, given the revenue impact, it is not possible to bring these products under GST right now. For many states, the revenue received from VAT accounts for 25-30% of their total tax income.
Finance Minister Nirmala Sitharaman said last week that the central government deliberately did not include petrol and diesel in the proposal of the GST Council. She clarified, legally, we are ready, but this decision has to be taken by the states. Sitharaman said that even in 2017, at the time of implementation of GST, the then Finance Minister Arun Jaitley had discussed this issue. He said that if the states agree, the GST Council will have to decide the tax rate, after which it will be included in the law.
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Petrol, diesel and alcoholic beverages have been excluded from its purview since the implementation of GST in July 2017. These products are major sources of revenue for the central and state governments. States fear that bringing these products under GST will affect their tax policy, pricing and ability to influence consumption.
Many states believe that VAT on petrol and diesel is important for their economic stability. They may lose this autonomy if GST is included. At present, a consensus is yet to be reached between the Center and the states on this issue. To bring petrol and diesel under the ambit of GST, consent of the states and uniformity on tax rates is necessary.
