Petroleum Products to be Under GST Ambit if States Agree

Centre levies around 32 percent tax on petroleum products while 20% is being imposed by states

Published: 08th December 2015 03:35 AM  |   Last Updated: 08th December 2015 03:37 AM   |  A+A-


NEW DELHI:  The Union government feels that petroleum products should be under the ambit of the proposed Goods and Services Tax, but a final decision would be taken when the state governments come on board on it.

Also Read: India Moving in Right Direction on GST: Niti Aayog

Petroleum Minister Dharmendra Pradhan, on Monday said altogether 52 per cent tax is levied on petroleum products by both Central and State governments and such revenues are used for various welfare and infrastructure projects.

The CEA panel for GST headed by Arvind Subramanian on Friday also included alcohol and petroleum products within the GST.

Pradhan said state governments are free to fix the amount of tax they want to levy on  petroleum products as every state has its own aspirations and development projects which they carry out through the revenue generated from the sale of petroleum products.

Around 32 per cent tax is levied by the Central government on petroleum products while around 20 per cent by state governments, Pradhan added.

“We are a welfare state and the government is committed for the welfare of the people and the country. The taxes levied by the Central and state governments are used for various infrastructure and social sector projects,” he said.

Pradhan said in principle, the petroleum products should come under the ambit of the proposed Goods and Services Tax but a final decision would be taken when the state governments come on board on it.

Ever since the NDA government came into power in May 2014, prices of petrol and diesel were reduced 19 times and enhanced seven times. He said the prices of petrol and diesel have been made market-determined with effect from June 26, 2010 and October 19, 2014 respectively.

CEA defends GST, quells fears on ‘sin’ tax

New Delhi: Chief Economic Advisor Arvind Subramanian on Monday defended a three-rate structure for GST, including a demerit or ‘sin’ tax of 40 per cent on products like tobacco and luxury cars, saying the recommendation is based on the current tax structure. The panel headed by Subramanian had on Friday recommended a three-rate goods and services tax (GST) structure of 12 - 17/18 - 40 per cent, the last category being for luxury cars. He said currently many of the luxury goods “are already taxed at very high rates” and the recommendations are “just a status quo”. “I do not think there should be any concern on that,” he said, adding that the panel has recommended “a very narrow list of things” for the so-called sin tax.


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