PUDUCHERRY: Puducherry has opposed any plans to initiate talks to tax diesel, petrol, and petroleum products under Goods and Services Tax (GST).
At the GST council meeting, Puducherry represented by PWD Minister K Lakshminarayanan said that states get considerable revenue from VAT on petrol and GST. If petrol and diesel are brought under GST it will adversely impact the States' revenue.
As far as Puducherry is concerned, revenue from VAT rate on petrol and diesel constitutes nearly 46% of the total revenue from commercial taxes (VAT+GST). The UT of Puducherry is already suffering revenue loss after the introduction of GST, due to its structural issues. Further, GST compensation payment will also end by June 2022. If petrol and diesel are also brought under GST, revenue will be affected and the UT will have to face a severe financial crisis.
For the implementation of GST, states have surrendered their fiscal autonomy. At present states have autonomy only in taxing petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel (ATF), and alcoholic liquor for human consumption.
The date of bringing petroleum products under GST is a policy decision exclusively within the domain of the GST Council.
Hence, a decision on the inclusion of petrol and diesel need not be taken by the council, since the worry is on the revenue collection for implementing various welfare schemes by the UT Government.