After the GST Council’s approval on Friday, at least two petroleum products, the natural gas and aviation turbine fuel (ATF) could be brought under the GST net to foster a gas-based economy and provide a boost to the pandemic hit aviation market.
As a result of the top leadership, MPs and industry are raising the issue, a plan to levy GST on petroleum products and its revenue implications for the Centre and states will be worked out and presented to the GST Council soon, who will make a final decision on the matter they said on condition of anonymity. Crude oil, natural gas, ATF, gasoline, and diesel are the five petroleum products.
Prime Minister Narendra Modi said the government is “committed to getting natural gas under the GST system” as he laid the foundation stone for oil and gas projects in Tamil Nadu on February 17, 2021. He said “the uniformity of tax would lower natural gas costs and increase its use across industries”.
Natural gas in its gaseous form is tax-free, but compressed natural gas is subject to an 11 percent duty. The value-added tax (VAT) on natural gas, on the other hand, varies from state to state, ranging from 6 percent to 24.5 percent. The first person said, “After several MPs raised the issue of bringing petroleum products under GST, the finance minister assured them that the matter would be brought before the GST Council.”
“An argument has been raised about getting diesel and petrol under GST,” Finance Minister Nirmala Sitharaman said in the Lok Sabha on March 23. I’m looking forward to it being on the agenda at the next GST Council. The council is scheduled to meet shortly, but no exact date has been set.
“States are unlikely to consent to put gasoline and diesel under GST in the immediate future due to the significant revenue implications”. Moreover, according to the second individual, “a start may be made with natural gas and ATF, where revenue consequences are not as significant.”
In 2019-20, the central and state taxes on petroleum products brought in over 5.555 lakh crore, with diesel and petrol coming in first and second, respectively. In response to an email inquiry, the Union Finance Ministry did not respond. The GST Council is headed by the Union Finance Minister, and its members include state finance ministers. The decisions of the council are frequently unanimous.
The Confederation of Indian Industry (CII) suggested that ATF be brought under the GST ambit in a memorandum to the government, to provide relief to pandemic-affected sectors. Putting ATF under GST will offer airlines long-term relief. It stated that inclusion under GST should allow for full input tax credit on all goods and services. While the central excise on ATF is 11 percent, the VAT on jet fuel varies from 0 percent to 30 percent depending on the state. On the entire invoice amount, a tax of around 18 percent is levied on chartered aircraft.
