Nirmala Sitharaman says open to discussing petrol and diesel under GST in next council meet

Finance Minister Nirmala Sitharaman on March 23 said she was ready to discuss bringing petrol and diesel under GST in the next council meet.

Replying to the debate on The Finance Bill 2021 in Lok Sabha, the finance minister said: “A point which members raised – bring petrol & diesel into GST. The highest tax today on petrol and diesel is in Maharashtra. I’m not pointing out whether one state is more or less. The point is, states also tax fuel, not just Centre. When Centre taxes it’s part of a devolvable amount”.

“Centre also taxes, states also tax. If there is this concern about fuel tax, I honestly think based on today’s discussion – many of the states would be watching this and in the next GST council if that discussion comes up, I will be glad to have it on the agenda and discuss it,” she further said.

On March 15, the finance minister said there is no proposal as of now to bring crude oil, petrol, diesel, jet fuel (ATF) and natural gas under the Goods and Services Tax (GST).

When GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities—crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF)—were kept out of its purview given the revenue dependence of the central and state governments on this sector.

This meant that the central government continued to levy excise duty on them while state governments charged VAT. These taxes, with excise duty, in particular, have been raised periodically.