The states appears to have dropped their reservations against bringing the petroleum crude and products under the ambit of the proposed Goods and Services Tax (GST).
Arvind Subramanian, the Chief Economic Adviser to the Centre, told reporters here that the “current agreement is that petroleum is in.” The states and the Centre have reached a broad consensus on the issue in recent discussions. However, the states will continue to charge Value-Added Tax (VAT) on sale of the petroleum items for “certain period”, to be determined by the GST Council, Subramanian added.
“The current agreement is that petroleum is in. Constitutionally petroleum (products) will be part of GST, but for a certain period the states will have the freedom to determine the tax rate”, the Chief Economic Advisor said.
This means if the Rajya Sabha passes the Bill “both the Centre and the States” will exercise their right to tax petroleum item for some time as being done now before the Constitutional Amendment.
This consensus is significant as the states earlier opposed the proposal for GST on petroleum crude and petro-products. The Lok Sabha has passed the 122nd Constitutional Amendment Bill, relating to introduction of GST. However, the Rajya Sabha, where the States have greater say, is yet to clear it.
As part of preparatory exercises before piloting the Bill in Rajya Sabha, this broad consensus could be reached, CEA suggested.
After failure to get it passed in the Winter Session, the Centre is preparing to make another attempt to pass the Bill in the forthcoming Budget Session in the Upper House.