"Government is in favour of bringing petroleum
products under GST. We would like to await consensus of the states and
hope states at some stage soner or later agree to the consensus," said
Jaitley.
in the Rajya Sabha on Tuesday Finance Minister Arun Jaitley said the
government wants to bring petroleum and petroleum products under the
ambit of GST and is awaiting the states’ response on the same.
"Government
is in favour of bringing petroleum products under GST. We would like to
await consensus of the states and hope states at some stage soner or
later agree to the consensus," said Jaitley.
At present, different
petroleum products are taxed differently across states. Given the huge
variance in the value-added tax (VAT) on petroleum products across the
states, the petroleum ministry has been advocating for uniformity in
taxes.
A case in point being diesel. While the VAT applicable on diesel in Delhi is 16.75%, it is 28.51% in Mumbai.
Experts believe the finance ministry’s plan, if put in practice, will help bring in uniformity in prices.
"Tax
burden on the products will be quantified. Since they are not a part of
GST, the adjoining extra cost will help quantify the burden. Prices of
these products shall also reach a probable uniformity," said Bipin
Sapra, partner-indirect tax at consultancy firm EY.
"Instead of
zero ratings, any finite number will have a massive impact on
compliances and also call to question some of the existing arrangements
in terms of implementation. Idea is to have a rate that won’t affect the
existing GST chain" added Anish De, partner-infrastructure government
and healthcare, KPMG India.
According to the Petroleum Planning
Analysis Cell (PPAC), which works under the ministry of petroleum and
natural gas, total state-wise collection of sales tax on petroleum, oil
and lubricant products for 2015-16 amounted to around Rs.1.43 trillion.
The total contribution of the petroleum sector to the central exchequer,
in 2015-16, was around Rs.2 trillion, including the cess on crude oil,
excise duty and custom duty, among others.
This comes at a time
when the National Democratic Alliance government wants to improve the
energy access for its citizens. India imported 202.85 million tonne (MT)
of crude oil in 2015-16 for Rs.4.16 trillion, according to PPAC. For
2014-15, India imported 189 MT of crude oil at a cost of Rs.6.87
trillion.
According to BP Global data, India has emerged as the
third largest consumer of crude oil with a consumption of 4.2 million
barrels per day (mbpd) for calendar year 2015, after the US (19.39 mbpd)
and China (11.96 mbpd). India overtook Japan which consumed 4.15 mbpd.
19 Dec 2017, 12:07 PM