Government ready to include petrol, diesel under GST, says FM Arun Jaitley

Government ready to include petrol, diesel under GST, says FM Arun Jaitley

The finance minister's statement comes in the backdrop of a demand by the Petroleum Ministry on uniformity on taxes on petroleum products due to difference in their prices in states after levying of Value Added Tax

With a consistent demand for the inclusion of petroleum products under the GST, the government may soon bring in these products under the uniform tax regime. The first clear indication on this came from Union Finance Minister in Parliament on Tuesday when he said the government was willing to include petrol, diesel and other allied products under the Goods and Services Tax (GST), and that before the GST Council took a decision, the government was awaiting response from different states of the country. Four days ago, Bihar Finance Minister and GST Council member Sushil Modi had said the government should bring in petroleum under the GST ambit. Also, the Petroleum Ministry has been advocating for a uniformity of taxes on petroleum products due to price variation in states after levying of Value Added Tax (VAT).

Answering a question asked by Telugu Desam Party (TDP) MP Devendra Goud in Rajya Sabha, Jaitley said the constitution amendment, already passed and ratified by state assemblies, has kept petroleum and allied products under the GST, but the final decision would be taken by the GST Council only. "We don't need to amend any law if petroleum products are to be brought into the GST, but only after the council takes a decision is when it will be introduced," he said.

On December 15, Bihar Finance Minister and GST Council member Sushil Modi had said electricity, real estate, stamp duty, and petroleum products should become a part of the GST regime. He also added that the GST council could merge 18 per cent and 12 per cent tax slabs and reduce the highest tax slab from 28 per cent to 25 per cent once the tax collection "stabilises". Sushil Modi had also assured the states that their revenues would unaffected as they would be free to levy addition cess to the petroleum products.

During the Rajya Sabha proceedings, former finance minister P Chidambaram also asked Jaitley to tell the House when the final decision would be taken. Jaitley retorted saying the previous Congress regime knew that the petroleum inclusion in the GST could be a "deal breaker", and so it kept petroleum products out of the GST draft. He said he was hopeful that the centre government and states would soon reach a consensus on the issue.

In its biggest GST tax rate change, the GST Council on November 10 had slashed tax rates on over 200 items but kept the petroleum products out of the GST. As many as 178 items of daily use were moved from the higher tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all type of restaurants.

Besides, several reports on Sunday said the government had ignored several warnings from private companies that the complex technology required for a nationwide goods and services tax GST) to work smoothly was not ready for launch. Weeks before the July 1 start of India's biggest tax overhaul in decades, the government declared itself ready and chided industry experts who said more time was needed to prepare for the changes, reports said. More than 10 tax and IT consultants who worked on the project said that behind the scenes the government was ignoring warnings for more testing of the complex system even as it was pushing through late changes.

While the sources said Infosys, which built the GST technological network, made "basic errors", they said government officials have not accepted any responsibility for the glitches in the GST roll out. The government is still making changes to tax rates, filing deadlines, and other features, making it difficult to stabilise the system, they said, declining to be identified for fear of losing future government contracts. The finance ministry and GSTN, the government authority managing the GST network, declined to comment on specific problems about the GST rollout or specific warnings by industry that more time was needed for testing. The GST law was debated for decades, industry had enough time to prepare, and glitches are being fixed, a finance ministry spokesman said.