GST on petroleum products will happen in phased manner, says Finance Secy Hasmukh Adhia

Demands to tax petrol and diesel under Goods and Services Tax have been raised vehemently since fuel prices reached new highs. There have been speculations that the GST Council is likely to take up the matter in one of its upcoming meetings. Now, Finance Secretary Hasmukh Adhia has been quoted by PTI as saying the GST Council will take a decision on bringing petroleum products under the GST ambit, and it will happen in stages.

As of now, petroleum products including petrol, diesel, crude oil, natural gas and aviation turbine fuel (ATF) have been exempted from the GST. This gives states the right to impose levies on them. A few days before the GST regime completed its one year, Adhia had said that natural gas and ATF are easier candidates for inclusion in the GST.

"We have done a lot but it does not mean that there is no scope for betterment of the existing system. We still believe that we need to do a lot more and we are working in that direction," Adhia said during an event.

While there is demand to bring petroleum products under the GST, the GST Council will have to finalise modalities for this, the report quoted Central Board of Indirect Taxes and Customs Chairman S Ramesh as saying.

A while back, the Ministry of Finance agreed to include natural gas and ATF under the GST, saying that these petroleum products are the easiest to tax under the indirect tax regime. The Ministry of Civil Aviation has raised its concerns over high tax rates levied on ATF. These state taxes inflate the operational costs of airlines, and in turn, drive up air fares. Considering this, the ministry had even written to the finance ministry, seeking inclusion of jet fuel under the GST with full input tax credit at the earliest.

On the issue of automation of tax refund, Adhia said it was meant to be automated right from day of the GST rollout but unfortunately, people made so many mistakes in filing return that the Income Tax Department had to get into manual mode at the last moment.

"We are again trying to make it completely automatic, the entire refund process. This is next thing. In terms of simplification of rates, slabs, we do understand the need for it but we did what was best in the given scenario. We could not have done anything other than this because we had to take care of revenue; we had to take care of concern of poor. Certainly we must move in that direction of something better than that," the secretary said.

(With PTI inputs)