The GST Council may consider bringing petrol, diesel and other petroleum products under the GST regime on Friday. A decision on this can be taken in the meeting to be held in Lucknow on Friday 17 September. It is believed that when petrol, diesel come under GST, it is possible to cut its prices.
In June, the Kerala High Court, based on a writ petition, had asked the GST Council to take a decision on bringing petrol and diesel under the ambit of the Goods and Services Tax (GST). Sources said bringing petrol and diesel under the purview of GST will be placed before the council in the light of the court and the council will be asked to do so.
Central taxes like excise duty and state duty VAT were subsumed in the national GST on July 1, 2017 but five petroleum goods petrol, diesel, ATF, natural gas and crude oil were kept out of its purview for the time being .
This is because the finances of both the central and state governments depend heavily on taxes on these products.
Since GST is a consumption-based tax, bringing petro products under the regime would mean the states where these products are sold and not the states which currently being the manufacturing hubs take maximum advantage of them. Huh.
It can be understood in simple words that Uttar Pradesh and Bihar will get more revenue at the cost of states like Gujarat with their huge population and consequently high consumption. The Central Excise Duty and State VAT currently account for almost half of the retail selling price of petrol and diesel.
This will also hurt the Center as excise duty of Rs 32.80 per liter on petrol and Rs 31.80 cess on diesel, which it does not share with the states. Under GST, all revenue will be divided between the Center and the states in the ratio of 50:50.