Petrol and diesel prices will continue to burn a hole in your pocket as the government has no immediate plan to include it under the GST net. The GST Council, which will meet on July 21, however, may give its nod to include ‘natural gas’ and ‘aviation turbine fuel’ under the indirect tax regime. Finance Secretary Hansmukh Adhia confirmed to PTI that the next GST Council meeting could decide on including these two items under the Goods and Services Tax. A reason the government wants to include these two items under the GST is low tax incidence on them, which is a safe bet for the government as they can be easily accommodated in the five-slab tax system.
So what items would be on the agenda for the next GST meeting? “Depends on what GST Council wants to discuss. But yes, among the 5 items, the two natural candidates for the first level of discussion would be natural gas and aviation turbine fuel. GST Council can decide what it wants to discuss, but these two are easier,” he told the news agency.
In the past one year of its implementation on July 1, 2017, several items have been included in the GST system, which led to a reduction of prices of items as well as widening of the indirect tax system in the country. The uniform tax structure has not only helped in formalising of the economy but removed middlemen. The introduction of E-way Bill has freed up internal trade while making it easy for people to do business across India.
The clamour for bringing petrol and diesel under the GST has grown in recent times, especially after petrol touched around Rs 78 per litre in Delhi post the Karnataka elections in May. The Opposition parties have consistently accused the government of being greedy in not reducing the excise duty of Rs 19.48 and Rs 15.33 on a litre of petrol and diesel, respectively. Both the centre as well as the state governments are in dilemma over the inclusion of fuel under the GST, which would mean letting go of a huge part of the revenue earned through levies charged on fuel.
Even under the highest tax bracket of 28 per cent, one litre of petrol would cost only Rs 50.87, compared to the current price ranging from Rs 76 to Rs 84 per litre in the metros.
The government’s excise collections from petro goods more than doubled in last four years, from Rs 99,184 crore in 2014-15 to Rs 229,019 crore in the last fiscal. States, likewise, saw their VAT revenue from petro goods rise from Rs 137,157 crore in 2014-15 to Rs 184,091 crore in 2017-18.
In a recent blog post, Finance Minister Arun Jaitley had said states earn more through ad valorem VAT when oil prices rise, and that excise duty remains fixed with changes in prices. “The states charge ad valorem taxes on oil. If oil prices go up, states earn more,” he said.
The Modi government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell. On the other hand, it cut the tax just once – by Rs 2 a litre in October 2017.
Source: Business Today
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