The Central Government is ready to bring petrol and diesel under the Good and Services Tax (GST) regime, only if the states agree on it. Petroleum and Natural Gas minister, Hardeep Singh Puri on Monday said that the Modi government is ready to bring petrol and diesel under the regime of (GST) Goods and Services Tax but the only possibility of this happening is if the states agree to this policy.
The minister pointed out the shortage of fuel and petrol in many countries around the world but there is no shortage in India. Hardeep Puri told the reporters, “For bringing the petrol and diesel under the GST, the states have to agree. If the states make the move, we are ready. We have been ready all along. It is another issue of how to implement it. That question should be addressed to the finance minister.”
The demand to bring petroleum products comes to the fore whenever there is a rise in the prices of fuel in the domestic markets. There is a possibility that the fuel and petrol prices would come down if they are brought under the GST ambit. On the other hand, the states are not willing to bring it under the regime of GST as it could mean giving up their rights to fix the indirect tax rates on the sale of petroleum products.
The Centre and the States, both get to earn hefty amounts from the tax collection of petroleum products. In 2021-22 the Centre fetched Rs 3.63 lakh crore through the levy of excise duties on these products whereas the states earned Rs 2.56 lakh through VAT/ sales tax on these products. If petroleum products are brought under the regime of GST, the states lose their flexibility to adjust sales tax or VAT rates as per their revenue needs.
The Minister of Petroleum and Natural gas, also added that petroleum prices have seen a sharp rise from July 2021 to August 2022 with 43% to 46% in the US and Canada, whereas India is the only country which remained at a 2% rise during this period. He said, “When many countries are witnessing a shortage of fuel and price rise, there is no shortage of fuel in India even in the remotest corners of the country.”
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