States want relief if petro products are under GST

NEW DELHI: Amid an outcry over spiraling fuel prices, state governments, including those ruled by BJP, are opposing petroleum ministerDharmendraPradhan’s suggestion that petroleum productsshouldbebroughtunderthe Goods and Service Tax (GST).

States say the move would adversely impact their revenue, which has increased by almost 50% for most states in the past three years on account of high value added (VAT) tax.

Consumers pay more than 100% tax — central and state leviescombined—onpetrolanddieselwhichactuallycost₹29.53and ₹29.12 after refining. The Centre levies excise duty of ₹21.14 on petrol and ₹17.33 on diesel and the states imposes value added tax that ranges between 20-47%.

Pradhan has suggested that petroleum products should be brought under GST for uniform tax mechanism across India.

“We have appealed to all the state finance ministers to bring petroleum items under GST in theinterestofconsumers,”Pradhan told reporters on Monday.

Stategovernmentofficialssaid the issue was discussed threadbare at meetings of the empowered committee of state finance ministers before the GST was implemented from July 1.

The state finance ministers agreed that petroleum products andliquor–whichcontribute up to half of the states’ revenue -should be kept outside the GST regime.TheCentrehadaccepted theargumentthatbringingthem under GST would result in huge revenue loss to the states.

“Bringing these products (petroleum and liquor) under GST has neither relevance nor propriety,” said Rajasthan’s representative in the empowered committeeofstatefinanceministers Rajpal Singh Shekhawat. “The GST council took a consciousdecisiontokeeppetroleum productsoutsidetheGSTambit”.

Chief minister Vasundhara Rajeholdsthefinanceportfolioin BJP-ruled Rajasthan.

Uttar Pradesh’s commercial taxcommissionerMukeshMeshram also ruled out the possibility ofloweringtaxesonfuel.“Taxon diesel and petrol in UP is already lower compared to that in most other states,” he said, admitting that lower tax would mean huge revenue loss to the state. Maharashtra government officials have also opposed the move.

Kerala finance minister TM Thomas Isaac told reporters

therewasnoquestionofagreeing to the Centre’s move to bring petroleum product under GST with lower rates.

“We and other states made it clearatthemeetingwiththeCentral finance minister that including petroleum and liquor under GSTwasnotacceptable,”hesaid.

Officials of other oppositionruledstatessuchasWestBengal, Kerala, Punjab and Karnataka havealsoopposedPradhan’sproposalsayingitwillnotbeacceptableuntiltheCentre“adequately” compensatesfortherevenueloss.

The Central government had

expresseditsinabilitytocompensate such a huge amount during meetingsoftheempoweredcommitteeofthefinanceministerson GST.

TheCongressandotheropposition partieshavelaunchedprotests in different states against the high fuel prices when the global crude oil price was less than $50.

Last time, the petrol price crossed ₹70 in Delhi or ₹80 in Mumbai was when the international crude price touched all time high of $ 115.