GST Council may consider bringing petrol, diesel under GST

[Kool_SRG]

The GST Council meeting is scheduled in Lucknow on Friday

 

The GST Council might on Friday consider taxing petrol, diesel and other petroleum products under the single national GST regime, a move that may require huge compromises by both central and state governments on the taxing these products.

The Council, which comprises central and state finance ministers, in its meeting scheduled in Lucknow on Friday, is also likely to consider extending the time for duty relief on COVID-19 essentials, according to sources in the know of the development.

GST is being thought to be a solution for the problem of near-record high petrol and diesel rates in the country, as it would end the cascading effect of tax on tax (state VAT being levied not just on the cost of production but also on the excise duty charged by the Centre on such output).

Also Read: Petrol price can come down to ₹ 75 if brought under GST, but there is lack of political will: SBI Economists

 

In June, the Kerala High Court, based on a writ petition, had asked the GST Council to decide on bringing petrol and diesel within the goods and services tax (GST) ambit.

 

The sources said bringing petrol and diesel within GST would be placed before the Council for discussion in the light of the court asking the Council to do so.

When a national GST subsumed central taxes such as excise duty and state levies like VAT on July 1, 2017, five petroleum goods – petrol, diesel, ATF, natural gas and crude oil – were kept out of its purview for the time being.

This is because both central and state government finances relied heavily on taxes on these products.

Since GST is a consumption-based tax, bringing petro products under the regime would have mean states where these products are sold get the revenue and not ones that currently derive the most benefit out of them because of they being the production centre.

Simply put, Uttar Pradesh and Bihar with their huge population and a resultant high consumption would get more revenues at the cost of states like Gujarat.

With central excise and state VAT making up for almost half of the retail selling price of petrol and diesel currently, levying GST on them would mean charging a peak rate of 28% plus a fixed surcharge going by the principal of the new levy being equal to the old taxes.

Tax experts said bringing petro products under GST will be a tough call for both the Centre and states as both will stand to lose. The BJP-ruled states like Gujarat will be a loser even if a product like natural gas is brought under GST as it gets a lot of revenue from taxing the local production and import of the fuel (LNG).

The Centre will also lose as the majority of the ₹ 32.80 per litre excise duty on petrol and ₹ 31.80 on diesel is made up of cesses, which it does not share with the states. Under GST, all revenues will be split 50:50 between the Centre and the states.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, in its September 17 meeting could also discuss the modalities of continuation of compensation cess beyond June 2022.

This is the first time in 20 months that the GST Council will have a physical meeting. The last such meeting was on December 18, 2019, before the COVID-19-induced lockdowns.

When the GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities – crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) – were kept out of its purview given the revenue dependence of the central and state governments on this sector.

This meant that the central government continued to levy excise duty on them while state governments charged value-added tax (VAT). These taxes, with excise duty, in particular, have been raised periodically.

While the taxes have not come down, a spike in global oil prices on demand recovery has pushed petrol and diesel to an all-time high, leading to demand for them to come under the GST.

Including oil products in GST will not just help companies set off tax that they paid on input but will also bring about uniformity in taxation on the fuels in the country.

The Council, in its 45th meeting on Friday, would also consider extending the duty relief available on COVID-19 essentials.

The previous Council meeting was held via videoconferencing on June 12 during which tax rates on various COVID-19 essentials were reduced till September 30.

Goods and services tax rates were slashed on COVID-19 drugs such as Remdesivir and Tocilizumab as well as on medical oxygen, and oxygen concentrators other COVID-19 essentials.

With regard to compensation cess, the Council is likely to discuss the modalities for continuing of levy of cess on sin and demerit goods. The amount collected would be passed on to the states for loss in revenue on account of GST.

[Kool_SRG]

GST Panel May Consider Bringing Petrol, Diesel Under GST Ambit: Report

GST Council might consider taxing petrol, diesel and other petroleum products under the single national GST regime.

The Goods and Services Tax (GST) Council might on September 17, consider taxing petrol, diesel and other petroleum products under the single national GST regime.

The Council, which comprises central and state finance ministers, in its meeting scheduled in Lucknow on Friday, is also likely to consider extending the time for duty relief on Coronavirus essentials, according to sources in the know of the development.

GST is being thought to be a solution for the problem of near-record high petrol and diesel rates in the country, as it would end the cascading effect of tax on tax (state VAT being levied not just on the cost of production but also on the excise duty charged by the Centre on such output).

In June, the Kerala High Court, based on a writ petition, had asked the GST Council to decide on bringing petrol and diesel within the goods and services tax (GST) ambit.

Sources said bringing petrol and diesel within GST would be placed before the Council for discussion in the light of the court asking the Council to do so.

When a national GST subsumed central taxes such as excise duty and state levies like VAT on July 1, 2017, five petroleum goods – petrol, diesel, aviation turbine fuel (ATF), natural gas and crude oil – were kept out of its purview for the time being.

This is because both central and state government finances relied heavily on taxes on these products.
Since GST is a consumption-based tax, bringing petro products under the regime would have mean states where these products are sold get the revenue and not ones that currently derive the most benefit out of them because of they being the production centre.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, in its September 17 meeting could also discuss the modalities of continuation of compensation cess beyond June 2022.

This is the first time in 20 months that the GST Council will have a physical meeting. The last such meeting was on December 18, 2019, before the pandemic-induced lockdowns.

[Kool_SRG]

Will be interesting if this actually happens but states will not accept this since they will be at major loss..

 

Lets see how they work it out.

[paaparao]

15 minutes ago, Kool_SRG said:

Will be interesting if this actually happens but states will not accept this since they will be at major loss..

 

Lets see how they work it out.

silent batting baane sesthunnavu MODI ki Shah ki....

Actually full Anti vochindi MODI ki public lo Gas price, Petrol prices tho. Anduke State CM lani marusthunnadu. inka thappinchukodaniki final ga ee proposal pettadu lavadek baal gaadu.....veedi daridram eppudu voduluthundo India ki. 

[Telugodura456]

This will be loss to states in south and gain for states in north

[Kool_SRG]

11 minutes ago, paaparao said:

silent batting baane sesthunnavu MODI ki Shah ki....

Actually full Anti vochindi MODI ki public lo Gas price, Petrol prices tho. Anduke State CM lani marusthunnadu. inka thappinchukodaniki final ga ee proposal pettadu lavadek baal gaadu.....veedi daridram eppudu voduluthundo India ki. 

States ni inka centre mundhu dehi anettu chesendhuke ee TWIST..

[Gnan_anna]

1 hour ago, Kool_SRG said:

Will be interesting if this actually happens but states will not accept this since they will be at major loss..

 

Lets see how they work it out.

No chance...anavasaranga opposition perigipoddhi...some states will fight tooth nd nail to oppose this ..asaley mg poye rojulu daggarapaddayi ippudu inka one side support kashtamey..

[Sword_KanthaRao]

Political gimmick before the state elections. 

Center will literally push the blame on to the states for the rise in fuel prices, which of course is the primary reason. 

The only states that will oppose are Bengal and Tamil Nadu, MH to an extent that it has to oppose but other wise it may stay neutral.

[Thokkalee]

Bring liquor also into gst… along with Petrol/Diesel 

[Kool_SRG]

As predicted Petrol & Diesel are going to stay out of GST...

[kidney]

1 minute ago, Kool_SRG said:

As predicted Petrol & Diesel are going to stay out of GST...

vallu cheppadam .. manam nammadam 

[Raven_Rayes]

I think India has no way out of this other than to bring petrol/diesel into GST, and increase borrowing limits for states for upto 50% of their GDP at rates close to 2%.

petrol staying out of GST increases the overall cost of production, since it can't be claimed back as input  tax.

They can reduce the central GST component to 5%, and increase income tax rates.

[Raven_Rayes]

anyway, lets see if with huge petrol prices, if India makes a radical shift to electric.

[Raven_Rayes]

asalu inflation entha ippudu india lo? around 6%

I thnk people are overreacting to the petrol prices.

[kidney]

5 minutes ago, Raven_Rayes said:

anyway, lets see if with huge petrol prices, if India makes a radical shift to electric.

rates thaggavu kaka..

monna tv, mobile gst rates thaggisthae.. rates thagginayi ani news lo vesaru.. retail lo chusthae.. mobile tv base price add chesi same rate ki ammuthunnaru..

ninna gold rate ₹48000 to ₹43000 thaggindhi annaru… velli chusthae.. same price.. endhi antae gold rate thaggindhi, other tax perigindhi annaru.. say making, other charges pencharu

ivala Oil dhara thagguthandhi antaru.. retail lo price emi thaggadhu for customers..

As per my guess.. final prices never gets reduced for a customer.. if only on a rupee or paisa.. ippudu vunna petrol rate ₹100.. next few years lo ₹150 aiythadhi