States oppose inclusion of petro products, liquor in GST

While the Centre wants liquor and petroleum products to come under the proposed Goods and Services Tax (GST) regime, states are not ready to relent as these products are major sources of their revenue.

Several states have opposed the move to bring petroleum products and liquor under the GST fold while others have expressed reservations on including “entry tax”.

“Most of the states have opposed bringing petroleum products and liquor under GST framework. They want to keep the two items out of GST,” Empowered Committee Chairman and Jammu and Kashmir Finance Minister A R Rather told reporters after the meeting of the Empowered Committee of State Finance Ministers.

The Centre is of the opinion that subsuming petroleum products and alcohol would help avoid distortions in the structure of the unified indirect tax designed to make the country a single market.

Taxes on petroleum account for close to 13 per cent of the Centre’s tax revenue while it accounts for nearly 30-40 per cent of states’ revenue.

The Parliamentary Standing Committee on Finance, led by BJP’s Yashwant Sinha, too has recommended inclusion of petroleum products and alcohol in the GST.

In Monday’s meeting, the members deliberated on the revised draft of the Constitutional Amendment Bill for introduction of new indirect tax regime.

The empowered committee, however, did not complete discussion on the revised bill due to paucity of time and because finance ministers of only a dozen states could present their views. The next meeting will be held in the middle of the next month in Meghalaya.