The GST Council will meet in Lucknow on September 17 under the chairmanship of Union Finance Minister Nirmala Sitharaman. More than four dozen will be held at the meeting. The meeting will focus on the important decision to bring petrol and diesel under the Goods and Services Tax (GST). If fuel and petroleum products come under GST, the general public, who have been harassed by rising fuel prices, are expected to get relief soon.
At the GST Council meeting, chaired by Sitharaman and attended by state finance ministers, the issue of imposing a uniform tax on petroleum products under the ‘One Nation, One Rate’ policy could be discussed. But it could cost the central and state governments dearly, and while the corona is already depleting the coffers, it could lose huge revenue from taxes on petrol and diesel. It is estimated that the government may have to bear a loss of around Rs 1 lakh crore.
Fuel was excluded when GST was introduced
At the time the GST was introduced in the country, five petroleum products – petrol, diesel, aviation fuel (ATF), natural gas and mineral oil – were excluded from the current GST. This is the 45th meeting of the GST Council, which is taking place after a long period of 20 months. Earlier, a direct meeting was held on December 18, 2019 before the Corona lockout. Subsequent meetings have been held in this online format.
Rates will be halved
At present petrol-diesel is subject to excise duty by the Central Government and value added tax (VAT) and cess by the State Government. Taxes are having an adverse effect on the selling price of petrol and diesel, which account for 60 to 62 per cent of the price per liter of these fuels. Therefore, if petrol-diesel is brought under GST, their skyrocketing rates are likely to be halved. According to economists at SBI, if petrol is brought under GST, it will cost Rs 75 per liter, while diesel will cost Rs 68 per liter.
Maharashtra opposes bringing petrol and diesel under GST
Explaining that the state’s right to levy taxes should not be attacked, Deputy Chief Minister and Finance Minister Ajit Pawar on Thursday said that Maharashtra was opposed to bringing petrol and diesel under the Goods and Services Tax (GST). The state will strongly oppose the inclusion of petrol and diesel in the goods and services tax, said Ajit Pawar. The state’s right to levy taxes should not be attacked. If such a proposal is made, the state will oppose it, he said.
Loss of Rs 40,000 crore
The inclusion of petrol and diesel in the goods and services tax could cause huge financial losses to the state. The state earns about Rs 35,000 to Rs 40,000 crore annually from the sale of petrol and diesel. If fuel is included in the goods and services tax, the state will have to release water on that amount. In the current economic scenario, the state cannot afford it. Since the income does not increase while the expenditure increases, a deficit budget has to be presented already. The state earns about Rs one lakh crore through state goods and services tax. The share of fuel is 40%. This is why the state opposes the inclusion of fuel in the scope of goods and services tax.
Get the state share money
Pawar also said that while implementing the Goods and Services Tax, the states should be paid on time as per the assurance given in Parliament. The state is yet to receive Rs 30,000 to 32,000 crore from the Center. The demand for early release was made on behalf of the state at a meeting with senior officials of the policy commission just two days ago. The state gets most of its taxes from goods and services tax. This should not change the prevailing tax structure, said Pawar.
… Only then petrol-diesel cheaper: Sudhir Mungantiwar
If petrol-diesel is included in the Goods and Services Tax (GST), petrol in the state will be cheaper by Rs 25 per liter and diesel by Rs 20-22. Former Finance Minister and senior BJP leader Sudhir Mungantiwar on Thursday demanded that the Center and the GST Council should take this decision to give relief to the people and that the state government should also give relief to the people without protesting. The state should levy as much tax as the people can afford. Don’t cheat. He also said that if petrol-diesel was brought under GST, even if the maximum tax rate of 28 per cent was kept, it would be cheaper.
Extension of GST deduction on Corona related drugs
The same meeting of the GST Council is expected to discuss further extension of the reduced tax period on drugs and ingredients required for the treatment of coronavirus. A decision is likely to be taken to extend the tax exemption on selected drugs till December 31.