Petroleum Minister Dharmendra Pradhan has said that the petroleum products should come under the ambit of the proposed Goods and Services Tax (GST) but said that the final decision would be taken only after reaching consensus with the state governments.
Clarifying the statement, Petroleum Minister said that altogether 52 per cent tax is levied on petroleum products by both central and state governments and such revenues are used for various welfare and infrastructure projects. Out of 52 percent around 32 per cent tax is imposed by the Central government on petroleum products while around 20 per cent is levied by state governments.
State governments earn a major chunk of their revenue from taxes on petroleum products such as petrol and diesel which are also easy to collect as public sector oil companies pass on these levies direct to the states. States are, therefore, staunchly opposed to letting go of these goods.
Pradhan further added that the state governments are free to fix the amount of tax they want to levy on petroleum products as every state has its own aspirations and development projects which they carry out through the revenue generated from the sale of petroleum products. Besides, he said that ever since NDA government came into power in May 2014, prices of petrol and diesel were reduced 19 times and enhanced seven times.
Meanwhile, the chief economic adviser (CEA) panel for GST headed by Arvind Subramanian also recommended alcohol and petroleum products within the GST.
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