GST bandwagon faces more blocks as states say no to including petroleum products

New Delhi: Finance Minister Arun Jaitley said on Monday that the states are not in favour of including petrol and diesel into GST at the moment, ruling out any immediate levy of the new indirect tax on these petroleum products.

While GST was rolled out on 1 July, real estate as well as crude oil, jet fuel or ATF, natural gas, diesel and petrol were kept out of its purview. This meant that the products continued to attract duties like central excise and VAT.

"So far the mood of states (most of the states) is not in favour of including it (in GST) at the moment. But I am sure as the GST experience moves on, I think, natural gas, real estate -- these are areas which are to be brought in and then probably at some stage we will keep trying for petrol, diesel and potable alcohol," Jaitley said.

The five petroleum items have been kept out of GST as they are considered cash cows, giving both the Centre and states bulk of their tax revenues. But keeping them out has created compliance issues including taking input tax credit.

Representational image. Reuters

Representational image. Reuters

For example, a refinery producing diesel and petrol would pay GST on the procurement of plant, machinery and services but that tax would not be creditable against excise duty and VAT levied on petrol and diesel.

Jaitley said further rationalisation of the tax rates would continue as revenues go up and ultimately the 28 percent tax slab would be restricted to demerit and luxury goods.

"GST broadly has settled down. Almost in every meeting now, we are able to rationalise the tariffs and this process will continue. It will continue with the structure tariffs being rationalised and the structure itself being rationalised as the collections go up," he said.

The minister said that GST currently is a voluntarily declared GST with one check and safeguard that is the Input Tax Credit.

"The taxpayers' base in indirect tax has widened. I think slowly as the software system matures and the 2-3 anti-evasion measures that are possible are put in place, the compliance level in GST will automatically improve," he said.

Jaitley said from voluntary declaration under the GST which are currently taking place, because of anti-evasion measure in place, the collection will improve. An improved collection will help sticking to fiscal deficit target in coming years, he said.

The government has set a fiscal deficit target of 3.3 percent of GDP in 2018-19, down from 3.5 percent this fiscal.


Updated Date: Feb 06, 2018 08:47 AM

Also Watch

IPL 2018: Royal Challengers Bangalore eye revival against Chennai Super Kings as 'Cauvery Derby' comes back to life
  • Thursday, April 26, 2018 In the Kanjarbhat community, a campaign against 'virginity tests' is slowly gaining ground
  • Tuesday, April 24, 2018 It's A Wrap: Beyond the Clouds stars Ishaan Khatter, Malavika Mohanan in conversation with Parul Sharma
  • Monday, April 9, 2018 48 hours with Huawei P20 Pro: Triple camera offering is set to redefine smartphone imaging
  • Monday, April 16, 2018 Rajyavardhan Singh Rathore interview: Sports can't be anyone's fiefdom, we need an ecosystem to nurture raw talent

Also See