gst: How long do you want to keep fuel out of GST: Centre to states – Times of India
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LUCKNOW: After keeping petroleum products out of GST for four years, the Centre is now seeking a timeline for its inclusion into the new tax regime — a move that is set to spark angry protests from states, report Neha Lalchandani and Sidhartha.
“We are not saying that we should bring petrol and diesel under GST immediately, we are basically asking states to suggest a timeline,” a government source told TOI ahead of the crucial meeting of the GST Council here on Friday.
Union finance minister Nirmala Sitharaman will chair the 45th meeting, the first physical huddle after over 16 months.
GST on fuel will help companies claim input credit
The all-powerful body, which decides on rates and policies for the new indirect tax regime and comprises state and Union finance ministers, has 18 major issues listed on the agenda.
States, cutting across party lines, are seen to be reluctant to agree to shifting auto and aviation fuel to GST, away from the value added tax regime, as they will lose whatever control they have over revenues.
After the introduction of GST in July 2017, states now have the power to decide on VAT on fuel along with excise on alcohol. During the Covid crisis, states, as well as the Centre, used the two groups of products to generate resources.
From a consumer point of view, levying GST on fuel is unlikely to result in a sharp fall in taxes, which currently top 50%, but will help businesses get credit for tax paid on inputs.
Although there is a high court order on the issue, the contentious compensation formula may also have a role to play and is sure to split the Council, which has been a divided house of late with Opposition-ruled states taking positions that are at variance with the Centre. The GST Council will also discuss extension of concessional levies on several Covidrelated drugs and products till December.
Further, there are several items related to textiles, footwear and fertiliser where the Centre is seeking a correction in the inverted duty structure – where the finished product faces higher levies than inputs. While the issue has been on the agenda for over a year, the government is keen to get a resolution this time, sources said.
The other aspect of recalibration of rates, something that the Centre had suggested in early 2020 has, however, been kept out of the agenda for the time being.
Other matters under discussion are use of PAN card for registration under GST.
“We are not saying that we should bring petrol and diesel under GST immediately, we are basically asking states to suggest a timeline,” a government source told TOI ahead of the crucial meeting of the GST Council here on Friday.
Union finance minister Nirmala Sitharaman will chair the 45th meeting, the first physical huddle after over 16 months.
GST on fuel will help companies claim input credit
The all-powerful body, which decides on rates and policies for the new indirect tax regime and comprises state and Union finance ministers, has 18 major issues listed on the agenda.
States, cutting across party lines, are seen to be reluctant to agree to shifting auto and aviation fuel to GST, away from the value added tax regime, as they will lose whatever control they have over revenues.
After the introduction of GST in July 2017, states now have the power to decide on VAT on fuel along with excise on alcohol. During the Covid crisis, states, as well as the Centre, used the two groups of products to generate resources.
From a consumer point of view, levying GST on fuel is unlikely to result in a sharp fall in taxes, which currently top 50%, but will help businesses get credit for tax paid on inputs.
Although there is a high court order on the issue, the contentious compensation formula may also have a role to play and is sure to split the Council, which has been a divided house of late with Opposition-ruled states taking positions that are at variance with the Centre. The GST Council will also discuss extension of concessional levies on several Covidrelated drugs and products till December.
Further, there are several items related to textiles, footwear and fertiliser where the Centre is seeking a correction in the inverted duty structure – where the finished product faces higher levies than inputs. While the issue has been on the agenda for over a year, the government is keen to get a resolution this time, sources said.
The other aspect of recalibration of rates, something that the Centre had suggested in early 2020 has, however, been kept out of the agenda for the time being.
Other matters under discussion are use of PAN card for registration under GST.
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