Dharmendra Pradhan  (Photo: PTI)
Dharmendra Pradhan (Photo: PTI)

Oil minister Pradhan urges FM to bring petroleum products under GST ambit

  • Petroleum products—petrol, diesel, crude oil, natural gas and ATF—were not included in the GST list when it was introduced on 1 July, 2017
  • Currently, petroleum products attract central excise duty and value added tax levied by states

Oil Minister Dharmendra Pradhan has urged finance minister Nirmala Sitharaman to bring petroleum products under the ambit of goods and services tax (GST), starting with natural gas and aviation turbine fuel (ATF). Pradhan has urged that the matter be taken up in the next GST Council meeting.

“Given the complexity of petroleum sector and the revenue dependence of state governments in this sector, petroleum products have been kept outside the ambit of GST regime. There has been continuous demand from the petroleum industry for inclusion of petroleum products under GST regime," Pradhan said at the third India Energy Forum by CERAWeek.

Petroleum products—petrol, diesel, crude oil, natural gas and ATF—were not included in the GST list when it was introduced on 1 July, 2017. The GST Council excluded these products from the new indirect tax regime as state governments largely rely on them for their revenue.

Currently, petroleum products attract central excise duty and value added tax (VAT) levied by states.

If brought under the purview of GST, petroleum products will significantly add to the Centre’s revenues. GST collections hit a 19-month low of 91,916 crore in September, falling 2.7% from a year ago.

According to the finance ministry, this was the first time that the tax collection contracted on a year-on-year basis since the implementation of GST due to weakening demand amid slowdown in the economy.

The government’s GST collections were above the 1 lakh crore-mark during April-July, but fell in August and September. The centre aims to mop up 6.63 lakh core, minus the state’s portion of revenue, according to budgeted estimates.

Besides declining GST collection, there are fears that direct tax collections this fiscal may also fall short of target. In September, the government sharply reduced corporate tax rate to 22% from 30%.

In the July budget, corporate tax revenue was estimated at 7.7 lakh crore. After the announcement of a cut in the corporate tax rate, Sitharaman said the reduction in corporate tax rate would shrink revenue collections by around 1.45 lakh crore in the current financial year.

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