Tuesday June 25, 2019
Home India Some Petroleu...

Some Petroleum Products Could be Brought Under GST by New Government

In April, the GST collection had already shot up to record level of Rs 1.13 lakh crore

0
//
Petroleum Products, GST, New Government
GST levy on natural gas would help state-run oil companies. Pixabay

At least two out of five petroleum products, including the aviation turbine fuel or ATF and natural gas, are likely to be among the first set of petro products to be included in the GST ahead of an earlier agreed schedule.

Sources said that with Modi government again set to take charge of the government at the Centre, the prospect of two products being included into the GST fold has brightened. The Finance Ministry has started preparing ground for next round of discussions at the GST Council with proposal for taking out gas and ATF from GST first before evolving consensus on other petroleum products.

The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system and the Finance Ministry could consider placing the proposal in the initial meetings of the Council after the new government takes charge at the Centre.

As part of its efforts to build consensus with states on GST launch, the previous Modi government had decided to exclude five petroleum products viz crude oil, petrol, diesel, ATF and natural gas from the list items placed under GST but included products such as cooking gas, kerosene and naphtha in the new regime.

Petroleum Products, GST, New Government
The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system. Pixabay

This created a messy situation for companies, as they were required to comply with both the old and new tax regimes. Moreover, tax credits were not transferable between the two systems.

A member of the council had earlier said that though petroleum products were not kept out of the GST, its inclusion in the regular tax system might have to wait at least for a year by when the revenue impact of GST would be better known.

The government hopes that the GST collections would be well over Rs 1 lakh crore mark in all months of FY20 easing pressure on the revenue to bring in next wave of reforms. In April, the GST collection had already shot up to record level of Rs 1.13 lakh crore.

“ATF may be the first among petro product still outside GST. Inclusion of natural gas could be next or may be done simultaneously with ATF,” said government source privy to the development.

Also Read- Artificial Intelligence Expected to Double Innovation Rate in India by 2021

The jet fuel price’s inclusion would allow airlines to take input tax credit on the GST paid thus bringing down the effective cost. Similarly, GST levy on natural gas would help state-run oil companies such as ONGC, IOCL, BPCL and HPCL to save tax burden to the tune of Rs 25,000 crore as they would get credit on taxes paid for inputs and services. Tax credits are not transferable between the two different taxation systems.

Experts said that the ATF price would come down if it is kept in the 18 per cent GST bracket and no other surcharge is levied. The lower fuel cost would mean ticket prices going down for air-travellers. It would benefit corporate travellers the most as they would be able to claim credit on GST paid besides their effective tax rate would also come down. Fuel accounts for nearly 30-40 per cent of an airline’s operating cost.

Petroleum Products, GST, New Government
The government hopes that the GST collections would be well over Rs 1 lakh crore mark. Pixabay

Inclusion of gas would not pose a challenge for the GST Council as it is largely an industrial product where a switch over to new taxation would not be difficult. The revenue implication for the states is also low in the case of this switchover.

Earlier, former Oil and Petroleum Minister Dharmendra Pradhan had also made a strong case for inclusion of natural gas in GST saying that if polluting coal can be included, then the environment-friendly fuel certainly deserves a place in the new regime. He also favoured bringing others petro products under the GST gradually.

Also Read- Microsoft Partners with Alphabet on Quantum Computing: Report

Gas sales, including CNG and piped gas supplies attract VAT ranging from 5-12 per cent. (IANS)

Next Story

Filing GST Returns Too Taxing

It has made it mandatory for tax payers to file the income tax return by 31st of July. In case of the delay, the fine of Rs. 5000/- per file is being imposed

0
GST
GST is one of the strongest step taken in the direction of Digital Technology.

By Salil Gewali

No doubt the NDA government in the center brought about remarkable changes in the market and the fiscal policy. One of those includes GST with a strong backup of the digital technology. No one would disagree that this will contribute immensely to the nation building and boosting its economy. Many world economists are lauding the India’s move in this direction. Well, for all such dramatic changes our techno-savvy PM Modi’s relentless dedication and innovation is highly praiseworthy.

But, however, there are “murmurs of dissatisfaction” among the middle-class traders these days. The displeasure expressed by the business community is all about the government’s rigid diktat for the GST filing. The administration is apparently putting the hard squeeze on the middle and upper middle class traders and entrepreneurs to file GST “before 20th of each month”. In case of a delay, the penalty of Rs 50/- per day is slapped which is a huge disappointment. How on earth does the government expect each trader to have the computer knowledge? Most of the small traders have not yet touched the desktop. So, they all rush to the nearby tax professionals to do the job. Just imagine how a few tax experts in the town match up to the countless GST payers. Can ten thousands sick patients be treated by one single doctor in a short span of time? This is totally impractical.

GST
The displeasure expressed by the business community is all about the government’s rigid diktat for the GST filing.

Each tax expert has to file the return for the minimum 300 to 800 clients per month and that number is increasing by leaps and bounds. The traders are required to keep the detail account of all sales and purchases throughout the month for which they have to bear a good deal of incidental expenditures. Many erroneous entries are usually made in the filing of GST, but once the file submitted that can’t be revised. Usually, the last two days of the GST filing is a nightmare. Because the site is clogged due to heavy traffic. Does the government want the small traders being harassed and bugged out thus? Mere imposing the hard regulations will never yield the positive result.

There is another shocker of this government. It has made it mandatory for tax payers to file the income tax return by 31st of July. In case of the delay, the fine of Rs. 5000/- per file is being imposed. This is indeed a cruel imposition that might just bruise the confidence of obedient tax payers. Given the literacy rate and very poor “professionalism” in India, such hard decrees by the government only make the citizens more annoyed than happy. Here I intensely doubt if it is the BJP government that wishes so much hardship upon the public. Is it not trusting 1.25 billion Indians, as touted by our astute PM Modi, who all have been standing for him through thick and thin? I think the finance ministry immediately needs some overhauling for the interest of the general public.

Salil Gewali is a well-known writer and author of ‘Great minds on India’. Twitter: @SGewali.