Oil Minister Dharmendra Pradhan has urged Finance Minister Nirmala Sitharaman for bringing jet fuel and natural gas under the ambit of Goods and Services Tax (GST) regime to reduce the multiplicity of taxes and improve the business climate. He said ‘I make a strong appeal to Finance Minister to take this up with the GST Council and at least make a beginning by including natural gas and ATF in the GST.’ He said given the complexity of the petroleum sector and the revenue dependence of state governments in this sector, petroleum products-crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF)-have been kept outside the purview of GST regime when it was introduced on July 01, 2017.
The Minister has stated that there has been continuous demand from the petroleum industry for the inclusion of petroleum products under the GST regime. He felt that including ATF and natural gas will not just help companies set off tax that they paid on input but will also bring about uniformity in taxation on the fuels in the country. He said ATF accounts for almost half of the cost of an airline and rates vary from state to state depending on local VAT. He added that a uniform GST would also push the usage of environment-friendly natural gas whose share in the energy basket the government wants to increase to 15 percent by 2030 from current 6.2 percent.
Pradhan further said he was confident that GST Council will take a decision on the issue at the appropriate time. He said under the existing structure, these items attract the Centre's excise duty and a state's value-added tax (VAT). Both these and all other levies will get subsumed under GST if they are brought under its ambit. He noted that the decision on their inclusion depends on the financial position of states as revenues from these five petroleum products constitute a substantial chunk of state government finances. He added that barring a few, most of the states are incurring revenue shortfall as GST subsumed a dozen of taxes, introducing the single levy, in a bid to simplify taxation system and remove the cascading effect of 'tax on tax' in the country.