Key Points:
- “…if that discussion comes up, I will be glad to have it on the agenda and discuss it,” FM Sitharaman on including Petrol and Diesel under GST.
- Since May 6, 2020, the government has been earning Rs 33 per litre of petrol and Rs 32/litre of diesel in the form of central excise duty.
- “I want to tell this House that it is not possible to put petrol and diesel under the GST in the next eight to 10 years,” BJP leader Sushil Modi said.
On Tuesday, India’s Union Finance Minister Nirmala Sitharaman said that she was ready to talk about bringing in petrol and diesel under the GST umbrella in the next council meet of the Financial Discussion for the Country.
State levies and central excise duty account for more than half of the retail selling prices of petrol and diesel.
In the Lok Sabha on Tuesday, Sitharaman said, “A point which members raised – bring petrol & diesel into GST. Highest tax today on petrol and diesel is in Maharashtra. I’m not pointing out whether one state is more or less. The point is, states also tax fuel, not just Centre. When Centre taxes it’s part of devolvable amount.”
For instance, taxes make up for 60 per cent of the current retail price of petrol of Rs 91.17 a litre in Delhi. Excise duty constitutes 36 per cent of the retail price.
Finance Minister Nirmala Sitharaman added, “The Centre taxes and the states do the same. If there is this concern about fuel tax, I think based on today’s discussion many of the states would be watching this and in the next GST Council, if that discussion comes up, I will be glad to have it on the agenda and discuss it.”
Recently, the government agreed in the Parliament that since May 6, last year, the government has been earning Rs 33 per litre of petrol and Rs 32/litre of diesel in the form of central excise duty (including basic excise duty, cess and surcharge).
In comparison, between March and May 5, 2020, the central government’s per litre earning on petrol was around Rs 23 and Rs 19 on one litre of diesel.
In contrast to what Nirmala Sitharaman said, BJP Leader Sushil Modi spoke in the Parliament saying, “Repeatedly, the issue of putting petrol and diesel in the GST regime is being raked up. I have been associated with the GST for a long time, I want to know from the House, that if petrol and diesel are put under the GST regime, who will compensate for the loss of revenue of over ₹2 lakh crore to states.”
Modi added saying, “I want to tell this House that it is not possible to put petrol and diesel under the GST in the next eight to 10 years, as no state is ready to lose ₹2 lakh crore revenue, be it the Congress or any other government,” he further mentioned.
