Oil ministry for petro products in GST regime

At a time when the Centre and states trying hard to narrow down their differences over the proposed modalities for rolling out the Goods and Services Tax (GST), oil ministry has made a case for inclusion of petroleum products under the ambit of the proposed indirect tax regime.

“As of now the crude and petro products have been kept out of the GST regime, they should be a part of it, this should also save oil marketing companies from losing revenue every year,” an official said.

He said, at present, there are numerous rates of taxes and duties being imposed by different states on petro products. They think that if they sacrifice their revenue on these products, they will not be compensated by the Centre for the same. Currently, crude, motor spirit including ATF, HSD and natural gas have been kept outside GST.

This is done to protect the high tax revenue generated by these products to the state governments. The current tax rates on these products are very high, in some cases as high as 30 per cent. But, this has also led to loss of oil marketing companies, which are losing over Rs 30,000 crore annually.

Oil companies including Shell, BP, Essar and ONGC have held discussions with the Centre urging it to bring in all petroleum products like petrol, diesel and natural gas, under the GST so that they can avail of input tax credit on the same.

However, the states are not very keen to keep these items within the GST purview as state taxes on petroleum products comprises as much as 30 per cent of total state revenue. There are very few states in India including Mumbai, Gujarat, Andhra Pradesh, Bihar, which have oil refineries. GST being a destination-based tax, all oil producing (or origin states) would stand to lose massively.

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