Steps Towards The Inclusion Of Gas In Goods and Services Tax

Steps towards the inclusion of gas in GST, not an opinion on petrol and diesel. In view of the strong opposition from the states, the talk of bringing petrol and diesel under the Goods and Services Tax ( GST) is going to be in cold storage, but steps towards the inclusion of gas in the GST tax system are in progress.

There is also support from the states in the initial negotiations. The Ministry of Petroleum has sent a necessary note in this regard to the Ministry of Finance. The final decision will be in the GST Council. The government intends to implement this system by the end of this year.

According to highly placed sources in the Petroleum Ministry, initial opposition with states to include petrol and diesel in GST has led to opposition from every side.

Especially given the condition of the state treasury right now, there is no possibility of it at all. Due to the stagnation of industrial activities, tax revenue from petrol and diesel is the biggest source of revenue collection for the states. In such a situation, at least until the economy is corrected, there is no possibility of bringing petrol and diesel under GST.

On the other hand, states have been told that gas will not work without including it in GST. The reason behind this is that the work of gas supply is increasingly happening all over the country through the pipeline so steps towards the inclusion of gas in GST are gaining momentum.

The petroleum pipeline network is growing rapidly. The manner in which VAT is levied at different rates in every state, cannot be applied to pipeline networks. The states have understood this. If all goes well, the price of gas will be uniform across the country.

Sources in the Petroleum Ministry say the move will also help in promoting the gas-based economy in the country. With the price of gas being uniform across the country, it will be easier to move to the states with less supply than in the states where gas supply is high.

There seems to be a demand for inclusion in Many states account for 60 percent of the total revenue from these two products. At present, local taxes (VAT, etc.) are imposed on petrol and diesel at the rate of eight to 32 percent by the states.

Apart from this, the central government also levies excise duty. In 2019-20, states collected total revenue of Rs 2,00,247 crore from petrochemical products while in 2014-15 the collection was Rs 1,37,157 crore. During this period, the central government’s collection from petrochemical products has increased from Rs 1,26,025 crore to Rs 2,87,540 crore.

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