Logic for fuel in GST ambit

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New Delhi, Dec. 7: The BJP-led government wants petroleum products to come under the proposed goods and services tax (GST) regime, a marked contrast to the stand of the states.Petroleum minister Dharmendra Pradhan told the Lok Sabha today that petroleum products should come under GST, but the states should agree to the proposal.

Separately, officials of the finance ministry said they were working to set a deadline to bring petroleum products and alcohol under GST.

The Congress, too, had proposed to bring petrol, diesel and other fuels under the new tax regime. The Congress had charged that the ruling NDA alliance had been arbitrarily increasing taxes on petroleum goods even as global crude prices were falling, creating a situation where fuel prices have not fallen to the extent of the fall in the global prices of crude.

The Arvind Subramanian-panel on GST tax rates had last week come out with a report that recommended a four-rate tax structure with the standard rate being 17-18 per cent, at which most goods and services in the country will be taxed and a high rate for “sin” goods at 40 per cent.

The panel had also made out a case to include fuel items in the all-India tax structure.

Pradhan told the Lok Sabha that some 52 per cent tax are levied on petroleum products by both central and state governments. Out of this, 32 per cent are levied by the central government, while the remaining 20 per cent are levied by states, making India among the costliest countries for transport fuels.

At present, state governments are free to fix the amount of tax on petroleum products. Pradhan justified the high rates of state taxes. The states have their own development projects, which they fund using revenue generated from petroleum products.

“We are a welfare state and the government is committed for the welfare of the people and the country. The taxes levied by the central and state governments are used for various infrastructure and social sector projects,” the minister said.

Source: http://www.telegraphindia.com/1151208/jsp/business/story_57268.jsp#.VmYo69J94_4

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