Petro, alcohol under GST ambit will have to wait for revenues to stabilise: CBIC chairman

CBIC chairman Vivek Johri on Wednesday said that it would be easier to forge a consensus among the states to incorporate petro products and alcohol within the GST ambit as the government is now getting comfortable with the overall GST revenue post Covid.

While talking to Siddharth Zarabi, Managing Editor of Business Today TV, Johri explained why petro products and alcohol were not included in GST in last 7 years.

“You see the major sector which is out of GST for the time being, and it has been ever since its (GST) inception, is -etroleum and the five petroleum products, namely diesel, petrol, natural gas, and a few others are the only ones that are outside the GST net,” said Johri.

“The second item of course is alcohol,” he added.

Johri said that there was some reluctance to include them within the GST ambit right from the inception of GST because of the huge revenue dependence on these commodities by the states as well as by the Centre.

When asked about the speculations surrounding the time period for the  induction of petro procucts and alcohol in the GST, Johri said that currently it is difficult at this stage to predict as under the constitution provision, the council has to make a recommendation. He also highlighted that even though government is getting comfortable with the GST revenue, it will also have to stabilise before petroleum and alcohol are added to the GST net.

“In my view we will have to wait for revenues to stabilise for a longer period of time and to show the same kind of buoyancy, and then I think the states would show more readiness to allow these to come in,” said Johri.

Johri also highlighted that the GST revenue could be improved by focusing more on the compliance aspect of GST.

Johri said, “My expectation is that we will continue to clock revenue between Rs 1.5 lakh crore and Rs 1.55 lakh crore per month on an average.”

While talking about the benefits of GST, the CBIC chairman explained that a large number of small businesses have chosen to align with it, which has helped in formalisation of the economy.

Johri also said that GST has been unifying the national market and allowing businesses of all shapes and sizes to get integrated, first of all with the domestic market, across states boundaries without any hassle and then even with the international and global value chains.

Watch the full interview -