As discussions continue to bring petrol and diesel within the ambit of Goods and Services Tax (GST), Chairman of the Central Board of Indirect Taxes and Customs (CBIC) Sanjay Kumar Agarwal said it may not be possible to bring these items under the indirect taxation for the time being.
Asked if petrol and diesel should be brought under GST, Agarwal told IANS that petrol and diesel are presently subject to central excise duty and value-added tax (VAT), as these two petroleum items fetch a substantial revenue to the states by way of VAT and to the Central government by way of central excise duty.
“So, looking to the revenue implications, it may not be possible to bring these items under the ambit of GST for the time being,” he added.
The CBIC Chairman’s comment came as Finance Minister Nirmala Sitharaman said last week that the Central government intentionally did not include petrol and diesel in the GST Council proposal.
“Legally, we are ready, but this decision must come from the states,” she said.
According to her, petrol and diesel were set to figure, “even when GST was implemented, I remember my late predecessor Arun Jaitley talking about it”.
“Once the states agree, they have to decide on the rate of taxation in the council. Once that decision is taken, it will be put into the act,” FM Sitharaman noted.
In the GST implemented in July 2017, products like petrol, diesel, and alcoholic beverages were kept outside its ambit since then.
These commodities are major revenue sources for both the Central and state governments through excise duty and VAT. For several states, these contribute over 25-30 per cent of their tax revenue. States fear losing control over taxation policy, pricing, and the ability to influence consumption patterns through excise duty and VAT.
