Govt may consider bringing petroleum products under GST ambit

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.

This comes when fuel prices are at the highest levels and consumers are taking a hit. There has been a clamour to include fuels under the GST regime as that is expected to drastically bring down prices. 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). Currently, the five fuels are subjected to central excise, cess and state Value Added Tax which brings in huge revenues for the Centre and the states. Several states have also been opposed to subsuming fuels in GST as it is a consumption-based tax and bringing petro products under the regime would mean states, where these products are sold, get the revenue and not ones that currently derive the most benefit out of them because they are the production centre. 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. 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.