GST council meet today: Will petrol, diesel come under GST?
All eyes are set on the 45th Goods and Services Tax (GST) Council meeting to be held in Lucknow today. This is the first time in 20 months that the GST council will be doing any physical meeting. After December 18, 2019, all the GST Council meeting was done virtually.
Finance Minister Nirmala Sitharaman will chair the 45th GST Council meeting at 11 AM in Lucknow today, the Ministry of Finance said in a tweet.
Finance Minister Smt. @nsitharaman will chair the 45th GST Council meeting at 11 AM in Lucknow today. The meeting will be attended by MOS Shri @mppchaudhary besides Finance Ministers of States & UTs and Senior officers from Union Government & States.@PibLucknow pic.twitter.com/FRuGQT2Cv6
GST council meet today: Key agenda
The key agenda of the meeting is how to bring diesel, petrol and other petroleum products in the ambit of GST.
In the previous meeting held on June 12 tax rates on various Covid-19 drugs and essentials were reduced till September 30.
Petrol, diesel come under GST? What tax experts are saying
Tax experts said that seeing the current situation with respect to the Covid-19 situation, bringing petro products under GST will be a very tough call for both the Centre and states.
“There are certain items that are not covered under GST such as Petroleum products, alcoholic liquor and electricity. The reason is that these items contribute a remarkable amount of revenue to the states and Central. The GST Council might on Friday consider taxing petrol, diesel and other petroleum products under the single national GST regime, a move that may require huge compromises by both central and state governments on taxing these products. If petroleum is brought under the GST regime, both (central and state) the taxes would be merged and prices would be uniform across the country and there is a high possibility that we see a significant fall in the prices due to the elimination of cascading effect of tax on tax," said Abhishek Soni, Co-Founder & CEO, Tax2win.
Founder and CEO - Clear says that with petrol and diesel under the GST ambit, the burden on consumers will reduce.
“Fuel prices continue to rise and the complex and high rates of the indirect tax levy are one of the contributors to the rising prices. Currently, states charge VAT on petrol and diesel, which is on a value after adding the excise duty charged by the Centre. It leads to tax-on-tax or cascading effect, leading to higher cost. Every distributor will pass this cost onto the consumers, thus negatively affecting them. With GST, this issue gets resolved as a common levy by the Centre and states allows the input tax credit to be claimed available to such distributors. Ultimately, the prices will reduce. Several states are heavily dependent on tax revenues on fuel. It could force the GST Council to keep the GST rate at a peak of 28% (CGST+SGST) with a possible levy of cess until a few years to compensate some states for the loss they may incur. While current taxes account for almost 50% of the fuel price, the highest GST rate inclusive of cess can not exceed 40%. However, considering that excise duty and VAT put together is still more than what can be levied, the consumers will be paying a lesser price than they are currently paying for it, benefitting from such a move," Archit Gupta, Founder and CEO - Clear said.
GST is a “single tax" applied all over India, with a set-off provision for tax paid on inputs. However, the constitutional amendment Act on GST, while providing for inclusion of crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) under its ambit, had kept these products “zero-rated".
The Economic Times 17-09-2021