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Petroleum products to remain outside GST regime

petrol gst

The Goods and Services Tax Council has decided to keep petroleum products out of the GST regime, while consumers will have to keep paying the Compensation Cess levied on products like automobiles till March 2026 instead of July 2022 as originally envisaged at the time of rolling out the indirect tax regime.

“Council members spoke very clearly that they don’t want petroleum products to be included in GST at this time. We shall report the same to the court that the council has discussed it as per their desire, and the GST Council felt this wasn’t the time to bring petroleum products into GST,” Finance Minister Nirmala Sitharaman said.

The minister also indicated that the Union Government was not inclined to consider some States’ demand to extend the five-year period for which they have been assured a 14% revenue growth for giving up several taxation powers to pave the way for implementing the GST regime. “Legally, compensation was to be paid for five years till July 2022 with an assured level of revenue for the states,” Ms. Sitharaman said

“A detailed presentation was made on the revenue generation aspects, correction of inverted duty structure aspects and the various ways in which the revenue-neutral position, which was 15.5% at the time of introduction of GST has steadily come down to 11.6%,” she said.

“(To be) revenue-neutral is to keep it at 15.5% and actually, therefore, if revenues are coming down and you think it is not helping the overall GST collection, what was arrived at the time of introducing GST has been, knowingly or unknowingly, brought down by reduction in tax rates of some items,” she added.

The council decided last year that the Compensation Cess levy would be extended to repay the principal amount as well as the interest payable on these borrowings.

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