Government all set to include petrol, diesel under GST, says FM Arun Jaitley

As a result of the consistent demand for the inclusion of petroleum products like petrol, diesel under GST, the government may soon include these products under the uniform tax regime. The first clear hint on this came from Union Finance Minister in Parliament a couple of days back when Mr. Arun Jaitley said the government was willing to include petrol, diesel under GST, and that before the GST Council took a decision, the government was awaiting confirmation response from different states of the country. A couple of days ago, Bihar Finance Minister and GST Council member Sushil Modi had stated that the government should include petroleum under the GST domain. Also, the Petroleum Ministry has been suggesting for a uniformity of taxes on petroleum products due to price difference in states after imposing of Value Added Tax (VAT).

On December 15, Sushil Modi Finance Minister of Bihar and GST Council member had said real estate, electricity, stamp duty and petroleum products should become a part of the GST regime. He also added that the GST council could merge tax slabs of 18% and 12% into one and reduce the highest tax slab from 28% to 25% once the tax collection is stabilised. Sushil Modi had also assured the states that their revenues would remain unaffected as they would be free to levy addition cess to the petroleum products.

During the Rajya Sabha sessions, P Chidambaram the former finance minister also asked Jaitley to tell the House when the final decision would be taken this new inclusion. Jaitley replied saying the previous Congress regime knew that the petroleum inclusion in the GST could be a “deal breaker”, and so it was kept out of the GST draft. He said he was hopeful that the centre government and states would soon reach a consensus on the issue.

In its biggest GST tax rate change, the GST Council on November 10 had slashed tax rates on over 200 items but kept the petroleum products out of the GST domain. Close to 178 items of daily use were shifted to low tax bracket, bringing them down from 28% to 18%, while a uniform 5% tax was prescribed for all type of restaurants.

Besides, several reports said the government had not paid attention to several warnings from private companies that the complex technology required for a nationwide goods and services tax GST) to work smoothly was not ready for launch. Weeks before the launch of GST, the government did not listen to industry experts who said more time was required to prepare for the changes, reports said. More than IT and tax consultant professionals who worked on the GST project said that the government was deliberately ignoring warnings for more testing of the complex system even as it was pushing through late changes.

While the sources mentioned Infosys, a leading technology company which built the GST technological network, made “basic errors”, they said government officials did not accept any responsibility for the glitches in the GST roll out. Till date the government is making changes to filing deadlines, tax rates and other features, making it hard to bring stability in the system, they said. The finance ministry and GSTN, the government authority managing the GST network, refused to comment on specific problems about the GST rollout or specific warnings by industry related to testing. The GST law was debated for decades, industry had enough time to prepare, and glitches are being fixed, a finance ministry spokesman said.