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No pure GST on petrol, diesel; 28% tax plus VAT a possibility: Official

No pure GST on petrol, diesel; 28% tax plus VAT a possibility: Official

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If petrol and diesel – the two fuels of mass consumption – were to be brought under the GST- PETROLGoods and Services Tax (GST) regime, they would be taxed at the peak slab of 28 per cent, along with the Value Added Tax (VAT) which would be imposed by the states.

A top government official, while speaking to news agency PTI, said the ‘28% GST + VAT’ module is being contemplated by the government to bring fuel under GST. Although this would negate the concept of single taxation – which was the prime rationale implementing GST – it would ensure the states would not incur losses.

 There is no pure GST on petrol and diesel anywhere in the world and so in India too it will have to be a combination of GST and VAT,” the official said.

With the imposition of VAT on top of GST, the fuel prices will hover at around the same rates at present even if they will be taxed under the GST module, claim experts.

At present, the tax on petrol and diesel is made up of the excise duty levied by the Centre, along with VAT imposed by states.

While the excise duty is kept fixed by the central government irrespective of the hovering prices, VAT is ad valorem — it is charged as a percentage of the fuel cost.

The incumbent excise rate on per litre of petrol and diesel is Rs 19.48 and Rs 15.33 respectively. Meanwhile, the VAT rate varies from state to state, with Mumbai imposing the highest – 39.12 per cent, whereas, Andaman & Nicobar charging the lowest at 6 per cent.

Experts have pointed out that the ad valorem nature of GST could further accelerate the fuel cost in case of crude oil facing an upward trend.

Source: PTI
GST Council may bring natural gas, aviation turbine fuel under its purview at next meeting

GST Council may bring natural gas, aviation turbine fuel under its purview at next meeting

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GST Council is likely to bring in two petroleum products – natural gas and aviation turbine fuel (ATF) – under the ambit of the new indirect tax system at its next meeting, a senior government official told Moneycontrol. GST Council: natural-gasThe date of the Council meeting is yet to be decided but it is expected to happen later this month, the official said.

The rate at which these two products will be taxed is yet to be decided, the official said, adding that ATF may attract 12 percent tax.

“Discussion regarding inclusion of natural gas and ATF has already begun. If there is consensus, the GST Council, may introduce these products under GST,” the official said.

Currently, five petroleum products – petrol, diesel, crude oil, natural gas and ATF – are excluded from GST. These five items will continue to be taxed in accordance with the pre-GST tax regime, till the highest decision-making panel in the new taxation system, the GST Council, chooses to include it.

Under the existing structure, the fuels attract the Centre’s excise duty and a state’s value added tax. Both these and all other levies will get subsumed under GST if they were brought under its ambit.

The decision on their inclusion depends on the financial position of the states as revenues from these five petroleum products constitute a substantial chunk of state government finances.

States are incurring losses as GST, introduced from July 1, 2017, subsumed a dozen of taxes, introducing single levy, in a bid to simplify taxation system and remove the cascading effect of ‘tax on tax’ in the country.

Also Read: Petrol Should be Brought Under GST, Reiterates Dharmendra Pradhan

The Council had decided that states would receive provisional compensation from Centre for loss of revenue due to abolition of taxes such as VAT, octroi after the implementation of new tax system. The compensation would be met through levy of a ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first five years.

During July-March, 2017-18, the Centre paid Rs 47,844 crore as compensation cess to the states.

According to the industry, the exclusion of ATF and natural gas from GST is increasing the cost of these products as tax on inputs is not being credited against sale of these products, which ultimately, adds to the cost of production.

For instance, last month, the aviation ministry sought inclusion of the ATF under the GST umbrella as soaring global crude oil prices raised prices of jet fuels, among the biggest costs for an airline. Rise in international crude oil price has increased ATF cost by nearly 40 percent during the first five months of the calendar year. A higher jet fuel cost makes air tickets more expensive, ultimately affecting the customers.

Similarly, natural gas, natural gas is widely used as industrial input by a variety of industries such as steel, fertilizer, chemicals, and cement, among others. The industry has been complaining that unavailability of tax credit is against the basic objective of GST, which is to eliminate cascading impact of taxes.

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Source: Moneycontrol
Odisha to decide on petrol, diesel under GST when Council discusses matter

Odisha to decide on petrol, diesel under GST when Council discusses matter

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The Odisha government on Wednesday said it would take a call over the inclusion of petrol and diesel under the ambit of Goods and Services Tax when the matter is brought before the GST Council.petroleum-under-gst

“The state government will take a decision whether the petrol and diesel would be included under the purview of the GST when a proposal in this regard is brought in the GST Council,” said Finance Minister Sashi Bhusan Behera in his reply to a debate in the assembly on an adjournment motion over the increasing price of petrol and diesel.

He said Union Finance Minister is the chairman of the empowered committee and when the Minister brings the issue, it would discussed in the committee.

Behera admitted that the price of petrol and diesel will come down if it is brought under the ambit of GST.

The Finance Minister said that the empowered committee had decided to keep six items including petroleum products out of the GST, which was rolled out across the country from July 1 last year.

Giving a comparative figure across the country, Behera said the price of the two products is less than other states.

He blamed the Central government for increasing taxes on the two items repeatedly when the international prices were low and suggested to reduce the rate of central excise and additional taxes on petrol and diesel to bring down the prices of the two products.

He also claimed that Odisha collects only 26 per cent of VAT while the rate of VAT on petrol and diesel in other states are much higher.

Leader of Opposition Narasingha Mishra said that instead of accusing each other, the Assembly should adopt a unanimous resolution to recommend the Central government include petrol and diesel under the ambit of GST.

Ridiculing Union Petroleum Minister Dharmendra Pradhan who has given a call to states to include petrol and diesel under the purview of the GST, the Congress leader said: “You made a law that petroleum products can not be included in the GST. Besides, the states do not have the power to amend constitution to bring petrol and diesel under GST,”.

However, Bharatiya Janata Party (BJP) MLA Pradip Puruhit said the Central govenrment has already reduced central excise on petrol by Rs 2 per litre and also urged the state government to recommend petrol and disel be included under GST.

--IANS
States not in favour of petrol, diesel inclusion into GST: FM Arun Jaitley

States not in favour of petrol, diesel inclusion into GST: FM Arun Jaitley

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arun jaitley GST

Finance Minister Arun Jaitley today said 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 July 1, 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.

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 per cent 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 per cent of GDP in 2018-19, down from 3.5 per cent this fiscal.

Source: Financial Express
Petrol, diesel should come under GST, says Dharmendra Pradhan

Petrol, diesel should come under GST, says Dharmendra Pradhan

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Dharmendra Pradhan GST

Oil Minister Dharmendra Pradhan on Wednesday ruled out any government intervention to disrupt the daily revision in petrol and diesel prices despite the Rs7.3 per litre spike since July, saying the reform will continue.

Saying that many States had drastically increased value-added tax, he said, “It is high time that the GST Council considered bringing the petroleum products in the ambit of GST.”

He, however, remained non-committal on cutting taxes to soften the blow of the relentless rise in prices since the government need to finance huge infrastructure and social projects has to be balanced with consumer needs. Terming the criticism of a spike in rates as unfair, he said the drop in prices for over a fortnight after the daily price revision was introduced has been ignored and only the “temporary” phenomenon of a rising trend was being highlighted.

India relies on imports to meet 80% of its needs and so domestic fuel rates have been aligned to the movement of equivalent product prices in the international market since April 2002. Previously, the rates were changed every fortnight but since June 16 they are being revised daily, Mr. Pradhan said, adding that the daily revision immediately passes on the benefit of any reduction in international oil prices to consumers and avoids sharp spikes by spreading them in small doses.

“The government has no business to interfere in day-to-day operations of oil companies… government will interfere only to improve operational efficiency of oil companies,” he said after meeting the heads of state-run firms.


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He was replying to questions from presspersons on whether the government plans to stall the daily price revision in view of the spike in rates.

Mr. Pradhan said the global prices had risen due to factors such as the hurricanes in the U.S., and there were already indications of a “softening in the rates”. “As a result of these hurricanes, 13% of U.S. refinery capacity was shut down,” he said. Asked if the government would cut excise duty, he said, “That is a call the Finance Ministry has to take but one thing is very clear — we have to balance developmental needs with consumer aspirations.”

“We have to fund massive highways and road development plans, railway modernisation and expansion, rural sanitation, drinking water, primary healthcare and education. Allocations on all these heads has gone up significantly. Where do we get resources for these?”


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Source :  The Hindu