[TusharK]

Finance Minister Nirmala Sitharaman, has stated that petroleum products like petrol and diesel would come under the ambit of Goods and Services Tax (GST) once the states agree.



"The provision is already available for petroleum products to be brought into the GST. My predecessor had already made the window kept open,” Sitharaman said. “Once states agree, we will have the petroleum products also be covered under the GST. So that’s not so much of us not wanting it,” she added.

The industry has been demanding the government to bring petroleum products under GST ever since the new tax regime was rolled out in July 2017. While analysts say that it will help control inflation and promote industrial growth, it has been a contentious issue.

Most goods and services in India are covered under GST, except for petroleum products like petrol, diesel, ATF and natural gas, which still attract VAT, Central Sales Tax and Central Excise Duty. However, the final decision to bring these products under the ambit of GST rests on the GST Council.

Source: ET

Link to Team-BHP News

[condor]

When GST was being worked upon, the non-BJP states did not agree for petrol and liquor to be under GST. Jaitley had tried hard, but since the fundamental point that all states must agree could not be met, fuel has remained outside the ambit of GST. What FM is saying is in line with the framework of GST and the stand of these states. Nothing new.

[shankar.balan]

Originally Posted by condor

When GST was being worked upon, the non-BJP states did not agree for petrol and liquor to be under GST. Jaitley had tried hard, but since the fundamental point that all states must agree could not be met, fuel has remained outside the ambit of GST. What FM is saying is in line with the framework of GST and the stand of these states. Nothing new.

Frankly these products ought to be under GST.
One country. One Tax regime.

[prajwalmr62]

Originally Posted by shankar.balan

Frankly these products ought to be under GST.
One country. One Tax regime.

AS much as I like this idea, I'm somewhat sure that the Karnataka or any southern state for that matter is not going to receive even half of the taxes paid from here.

Can someone here post how much revenue a state can expect to lose if GST is implemented vs state alone reducing taxes on fuel to GST level?

[deathwalkr]

I don't have much hopes of that happening. The state government here has hiked fuel rates in their recent budget to make ends meet and losing control of that would be hard felt by them.

Maybe GST + State designated cess as additional?

[ABHI_1512]

Originally Posted by condor

When GST was being worked upon, the non-BJP states did not agree for petrol and liquor to be under GST. Jaitley had tried hard, but since the fundamental point that all states must agree could not be met, fuel has remained outside the ambit of GST. What FM is saying is in line with the framework of GST and the stand of these states. Nothing new.

Both the center and the state governments did not want to forego the huge revenue from the fuel and crude products including the Aviation turbine fuel. This decision to keep out these products from the ambit of GST was obviously a well thought out decision back then since both state and central governments depended heavily on the revenue generated by these products and it is still that way.

We all know how the excise duties were tweaked and given the name of cess by the central government to deny the state governments their share from the taxes. If the central government wants, they can easily reduce the rates of fuel by removing the cess and this is where many states have opposed the center. In fact, coming to opposing, Karnataka is at the forefront in opposing the decision to bring fuel under GST along with Kerala and Tamilnadu as well as Maharashtra.

The Kerala finance minister infact also stated that if center withdraws the cess components and the revenue is shared equally with the states, only then bringing the fuel under GST will help the consumers.

Kerala’s finance minister K.N. Balagopal said that bringing fuel under GST would not lower the price of fuel and wanted the Centre to lower excise duties first. “The Union government is already collecting Rs 28 for diesel and Rs 26 for petrol as cess. It is a special cess outside the divisive pool. It is not shared with the states. Another Rs 4 is charged for a litre of diesel as agricultural cess. So, if the government wants to reduce the price, the cess has to go,” he said. Earlier, he had said that bringing fuel under GST would result in losses worth Rs 8,000 crore to his state, annually. Since the additional levies are not shared with the state governments, the Centre should reduce those, he said.

The truth is, FM’s right from the late Arun Jaitley to current minster, are all circling around with the same monologue that states don’t agree. If they can bulldoze through so many bills in the Parliament in the absence of the opposition, what’s stopping them from bringing in a new legislation and bring fuel under GST ??


The fact is, even the center doesn’t want to forego it’s huge share from the fuel products but they conveniently blame the states for their inability to do the same when it’s them who should be asked the question. This is what the Finance Minister had to say even few years back when the Kerala High Court asked the GST council to think about the inclusion of fuel under GST-

Union finance minister Nirmala Sitharaman, who chaired the September 17 GST Council meeting, said that the topic of inclusion of fuel in GST was taken into the agenda purely because of the Kerala High Court’s instructions. “The Council had discussed it, and (it) felt that it was not the time to bring the petroleum products into the GST,” she told the media after the council meeting.

The whole report can be seen here:

https://www.indiatoday.in/india-toda...878-2021-09-22

[shashankjain16]

Originally Posted by ABHI_1512

If they can bulldoze through so many bills in the Parliament in the absence of the opposition, what’s stopping them from bringing in a new legislation and bring fuel under GST ??

That's not how it works, I believe. GST law is already in place and the decision to bring fuels under GST has to be taken by GST council, where each state has a representative. So, all states have to agree on that. Also, taxation comes under the concurrent list in our constitution, where some taxes are with union and some with states, that's why states can make their own laws on it as well as center. Center making any law will not forgo already added taxes by the states. They can be removed only if all states agree to remove them. You can argue that center can remove their part of excise duty, but that will be a total loss for the government and a very stupid move.

[Bhodrolok]

I don't think this will happen as long as states have thousands of crores of pending GST dues from the union government. This should work in an ideal world but with our fractured politics and abundance of central cess'es where the states don't get a share, this wont happen anytime soon.

[thanixravindran]

Relax folks, India is already in election mode. This utterance is just a preventive defence to blunt any criticism on the high fuel prices as well high GST rate (reduction of both will never happen) in the run up to elections.

Stay tuned for more fun in the coming months!!!

[shamanth]

We are seeing this statement ever since GST came, this is just an excuse, no clear intent to bring in GST for petrol. They have majority BJP ruled states to push through, if they wanted.

[Maverick_4662]

Originally Posted by shashankjain16

That's not how it works, I believe. GST law is already in place and the decision to bring fuels under GST has to be taken by GST council, where each state has a representative. So, all states have to agree on that. Also, taxation comes under the concurrent list in our constitution, where some taxes are with union and some with states, that's why states can make their own laws on it as well as center.

1)The centre's vote at the GSTC carries a weightage of 1/3 whereas all the states add up to 2/3. Decision is by majority of 1/2 so it's clear the centre has a virtual veto on decisions.

2)Quite frankly, Non BJP states won't be agreeing to shifting to the GST regime for petroleum products.

3) There is no concurrent list for taxation. There is a state and union list which is as per Schedule 7 of our constitution. GST subsumed many different taxes under it from both the Union and state lists.

4) The states have very little individual taxation powers post this. Major sources of revenue are now taxes on Petroleum, Liquor, Central devolution and borrowing.

5) Central devolution to states is basis Finance commission reports which have population as a criterion in deciding a state's share.

6) Southern states, especially KL,TN have been quite successful at population control measures in comparison to other states.

7) The FRBM Act limits the borrowing headroom that the state has.

8) So quite clearly, these states won't be agreeing to let go of the last revenue generating tax in hopes of ever dwindling central devolutions.

9) Union has been consistently imposing cesses and surcharges on many products. These are not part of the divisible pool of taxes and aren't shared with the states, Further reducing devolution.

10) That said, If the ruling party wasn't merely deflecting blame and genuinely wanted to bring the products within GST, It very much can with just the support of states ruled by the same dispensation.

[Raghu M]

She is just being diplomatic. Although they would want it to happen, all the non-BJP ruled states would oppose it tooth and nail. Look at the reaction after all BJP ruled states reduced fuel prices. All the non-BJP states opposed it. They protest about the high fuel rates but they do not reduce it themselves. TS will be hell opposed to this.

[Maverick_4662]

Originally Posted by Raghu M

all the non-BJP ruled states would oppose it tooth and nail. Look at the reaction after all BJP ruled states reduced fuel prices. All the non-BJP states opposed it. They protest about the high fuel rates but they do not reduce it themselves. TS will be hell opposed to this.

Like I explained in my above post, Just the will of the union and BJP ruled states is enough to pass such a resolution in the GSTC. Why not do that if you so earnestly do want it? This is simply deflection of blame.

[Raghu M]

Originally Posted by Maverick_4662

Like I explained in my above post, Just the will of the union and BJP ruled states is enough to pass such a resolution in the GSTC. Why not do that if you so earnestly do want it? This is simply deflection of blame.

The part that the states will lose a chunk of their income is to be blamed. They will simply go against the center's directives or even go to the Apex court. It will open a Pandora's box. So, the BJP plays it safe here. We want to do it, but they aren't cooperating. Although the BJP would want the current prices to run for at least another year to fund all the ambitious projects. I am just giving a layman view but that is the high level picture.

[RaghuVis]

Originally Posted by thanixravindran

Relax folks, India is already in election mode.

Slight correction. India is always in election mode. Rarely on governance mode.

GST itself took more than 45-50 years to come alive and that too is still a fractured way. This is more like "Hum Honge Kamyab Ek din".

I feel, by the time fuel comes into GST, electricity will move out of it considering EV is the direction we are moving into.