Home Business Petroleum products to be brought under GST in stages, says finance secy Adhia

Petroleum products to be brought under GST in stages, says finance secy Adhia

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Petroleum products will be brought under the ambit of Goods and Services Tax (GST), but in stages, finance and revenue secretary Hasmukh Adhia said today.

“One of the demands that is there before us, we will see. Everything will happen in stages,” said Adhia at a session on ‘One Year Journey of GST’ organised by Federation of Indian Chambers of Commerce and Industry (FICCI).

Currently, five petroleum products — petrol, diesel, crude oil, natural gas and aviation turbine fuel (ATF) — are excluded from GST. These five items are being 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, fuel products attract the Centre’s excise duty and state’s value added tax. Both these and all other levies will get subsumed under GST if they were brought under its ambit.

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While petrol and diesel may not be immediately included under the new indirect tax system, the GST Council in its next meeting on July 21 may explore the idea of introducing two items, natural gas as well as ATF under the nationwide single levy.

The Centre’s and the state’s revenue position will be a crucial factor before including them under GST.

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.

Regarding simplification of rate, Adhia said that while there is a need for it, the Council has done the best possible, given the situation.

“In terms of simplification of rate slabs, we do understand the need for it. But we did what was the best in the possible scenario. We couldn’t have done anything other than this. We have to take care of revenue, societal concerns of economically poor class and protect their products from taxation…we could do what was best possible,” Adhia said.

Currently. there are four broad tax slabs under GST- 5, 12, 18 and 28 percent. Some commodities such as gold and other precious metals attract 3 percent or less.

Recently, there has been a demand for shifting some of the 49 items in the highest tax slab, 28 percent, to a lower bracket.

However, the government has maintained that capacity to rationalise tax rates, as well as slabs will increase once the total volume of tax collected rises ‘significantly’ by taking measures against tax evasion and expanding the tax net.

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