BOTH Central & State Govts Are Gainers From Taxation On Petroleum Fuels

AS people  are adversely  affected  due to increasing  prices of Petrol and diesel , most  of them are not aware that the  taxation on petroleum products is like a  milch cow enriching  the coffers of both  the central and the state governments. Most of the states are yet to arrive at a consensus on bringing the petrol and diesel prices under the GST regime. Ever since Goods and Services Tax came into being on July 1, 2017, there have been talks and demand by several parties for bringing the petroleum products under the GST network. Vice Chairman of Niti Aayog, Rajiv Kumar, says the total state and central taxes on petrol put together are around 90 per cent right now.”He told IANS in an interview: “I can’t see how any state will take a cut so huge as the highest rate under the GST is 28 per cent. A new GST band will have to be opened up — and that will be an enormous exercise. While supporting “in principle” the idea of bringing all items under the new indirect tax system, he said those talking about bringing petroleum products under GST right now have not studied the subject  in detail. The total state and central taxes on petrol put together are around 90 per cent now. He suggested reducing taxes on petroleum products. States impose ad-valorem tax on oil and so they all had a windfall gain when prices rose. There is a need to rationalise it,” he said, adding “states should especially cut taxes.”Kumar said that both the central and the state governments should start the process of weaning themselves away from their dependence on oil taxation. The Central government collects Rs trillion as tax on oil out of the Central government collects Rs trillion as tax on oil out of which almost Rs 2 trillion goes to the states. It will not be possible for compensating the states for such a huge revenue loss. Once economy improves substantially, petroleum fuels can be put in the GST basket, he added. Meanwhile, reports from Gujarat’s Surat   say heavy tax burden under the new goods and services tax (GST) regime and the resultant losses in these businesses  have impacted textile and diamond trades (Image courtesy Google) .

 

 

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