New Delhi: In the meeting of the GST Council to be held on September 17, it is possible to consider bringing petrol and diesel under GST. This will be a step for which the central and state governments will have to make tremendous ‘compromises’ on the revenue front.
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.
Sources said that in this meeting, the deadline for duty relief on essential materials related to Govid-19 can also be extended. 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, VAT is not levied by the states on the cost of production of petrol, diesel, but before that excise duty is levied by the Center on their production, after that the states collect VAT on it.
The Kerala High Court, during the hearing of a writ 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 council meeting.
The GST system was implemented in the country from July 1, 2017. Central taxes such as excise duty and state duties such as VAT were subsumed in GST. But petrol, diesel, ATF, natural gas and crude oil were kept out of the purview of GST.
This is because both the central and state governments get huge revenue from taxes on these products. 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.
It can be explained like this. 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.