Gasoline Diesel GST Tax Decision GST Council Meeting Latest News

Image source: PTI

Gasoline, diesel under GST? Decision Friday

On Friday, the GST Council could consider taxing gasoline, diesel and other petroleum products under the single national GST regime, a move that could require huge compromises from central and central governments. States on the income they receive by taxing these products. The council, which includes central and state finance ministers, at its meeting scheduled for Friday in Lucknow, is also expected to consider extending the duty-free deadline on essential elements of COVID-19, sources with knowledge said. of evolution.

The GST is seen as a solution to the problem of near-record gasoline and diesel rates in the country, as it would end the cascading effect of the tax on the tax (state VAT is levied not only on the cost of production but also on the excise duties collected by the Center on this production).

In June, the Kerala High Court, on the basis of a petition, asked the GST Council to decide whether to include gasoline and diesel within the scope of the Goods and Services Tax ( TPS). The sources said the introduction of gasoline and diesel under the GST would be referred to the Council for discussion in light of the tribunal’s request to the Council to do so.

When a national GST included central taxes such as excise duties and state levies such as VAT on July 1, 2017, five petroleum products – gasoline, diesel, ATF, natural gas and crude oil – were excluded. within its jurisdiction at the moment. This is because central and state government finances were heavily dependent on taxes on these products.

READ MORE: GST collection in August above Rs 1.12 lakh crore: Ministry of Finance

Since the GST is a consumption-based tax, subjecting petroleum products to the regime would mean that the states where those products are sold get the revenue and not those who currently derive the most benefit from it because they are the center of production.

Simply put, Uttar Pradesh and Bihar, with their huge population and resulting high consumption, would get more income at the expense of states like Gujarat.

With central excise and state VAT currently accounting for almost half of the retail price of gasoline and diesel, collecting GST on these would mean imposing a maximum rate of $ 28. % plus a fixed surcharge corresponding to the principal of the new levy equal to the old taxes.

Tax experts have said that introducing petroleum products under the GST will be a tough call for both the center and the states, as both will lose out. BJP-led states like Gujarat will lose out even if a product like natural gas is subject to the GST as it derives a lot of revenue from the taxation of local fuel (LNG) production and importation.

The Center will also lose as the majority of the excise duties of Rs 32.80 per liter on gasoline and Rs 31.80 on diesel consist of royalties, which it does not share with the states. Under the GST, all revenues will be split 50/50 between the Central and the States.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, at its September 17 meeting could also discuss the modalities for maintaining the cessation of compensation beyond June 2022.

This is the first time in 20 months that the GST Council will hold a physical meeting. The last such meeting took place on December 18, 2019, before the closures induced by COVID-19.

When the GST was introduced on July 1, 2017, bringing together more than a dozen central and state levies, five commodities – crude oil, natural gas, gasoline, diesel, and aviation turbine fuel (ATF) – were excluded from its jurisdiction in view of income. dependence of the central government and the states on this sector.

This meant that the central government continued to levy excise duties on them while state governments charged value added tax (VAT).

These taxes, including excise duties, have been increased periodically.

Although taxes have not been lowered, a surge in global oil prices following the recovery in demand has pushed gasoline and diesel to an all-time high, which has led to their demand being subject to the GST.

Including petroleum products in the GST will not only help businesses deduct the tax they have paid on inputs, but will also help standardize fuel taxation across the country.

The Council, at its 45th meeting on Friday, would also consider expanding the duty exemption available on essential COVID-19 commodities.

The previous Council meeting was held via videoconference on June 12, during which tax rates on various essential COVID-19 products were reduced until September 30.

Goods and Services Tax rates have been reduced on COVID-19 drugs such as Remdesivir and Tocilizumab as well as medical oxygen and oxygen concentrators of other COVID-19 essentials.

With regard to the compensation tax, the Council is likely to discuss the modalities for maintaining the tax on property of sin and incapacity. The amount collected would be passed on to states for lost GST revenue.

READ MORE: TPS sponge tops Rs 1 lakh crore for second consecutive month in August

Latest business news

About Larry Noble

Check Also

Peter Obi, Oseni Rufai and the importance of a “no consequence” manifesto, by Rotimi Akinola

If left unchecked, Labor Party candidate Peter Obi will degenerate from 2023 election darling into …

Leave a Reply

Your email address will not be published.