Union Finance Minister Nirmala Sitharaman on Monday said there was no proposal to bring crude oil, aviation turbine fuel, petrol, diesel and natural gas under the Goods and Services Tax regime.
In a written reply to a question in Lok Sabha, Sitharaman said the law prescribes the GST Council to recommend the date on which the goods and services tax be levied on these items. “So far, the GST Council, in which the states are also represented, has not made any recommendation for inclusion of these goods under GST,” she said. “The council may consider the issue of inclusion of these five petroleum products at a time it considers appropriate keeping in view all the relevant factors including revenue implication.”
When the GST was brought in 2017, these five items were kept out of its purview in view of the revenue dependence of the central and state governments on the petroleum sector, according to PTI. This meant that the government could levy taxes on these items and the state could charge Value-Added Tax.
These taxes, including excise duty, have been raised periodically. Petrol and diesel prices touched all-time highs earlier this month because of a spike in global oil prices. Taxes had also not come down.
On Monday, petrol price in New Delhi stood Rs 77.96 per litre, while diesel cost Rs 68.97 a litre, reported The Economic Times. In Mumbai, petrol cost Rs 85.77 and diesel was priced at Rs 73.43. The prices came down marginally as rates were cut for the sixth consecutive day. The cut followed a 16-day hike that pushed fuel prices to their highest levels in India.
On March 5, Sitharaman had said the Centre and state governments should mutually take a call about reducing taxes on fuel, to cushion the impact of record-high domestic prices of petrol and diesel.
Currently, the central government levies a fixed rate of excise duty, while states levy different rates of Value Added Tax. Under the GST, the two would merge and bring uniformity, solving the problem of fuel rates being higher in states due to higher VAT.
Taxes and duties account for roughly 60% of the retail price of petrol and diesel in the country.
Opposition leaders, cutting across party lines, have blamed the government for the soaring prices, saying it was not doing enough to provide relief to the common man out of arrogance.
Sitharaman had defended the government’s position, saying that both states and the Centre draw revenue out of taxes levied on petrol and diesel. She said 41% of the tax collections made by the Centre go to the states. “So, there is an issue, which is layered and as a result, that has to be a matter ideally for the Centre and the states to talk about,” she said.
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