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A PTI report has claimed that major revenue loss will make the addition of Petrol and Diesel into the GST regime less likely, citing disapproval from the central and state governments. Petro-products were excluded from the GST regime which came into force on July 1st, 2017. Currently, the highest VAT on petrol is levied in Mumbai, at 39.12%.
If sources were to be believed, India might bring jet fuel and natural gas under the GST regime. The proposal to impose a 28% tax on aviation fuel will be under consideration on July 21st when a tax panel will mull over the topic. If aviation fuels are brought under GST, airlines will find it easier to make payments as the rates will be uniform across the country.
A top official involved with GST implementation in India has revealed that the country might follow a combination of GST and VAT systems over fuels. The peak GST rate plus VAT will be equal to the present tax incidence computed by adding Central Government’s excise duty and state government’s VAT. The Central Government might lose some Rs 20,000 crore of input tax credit if fuels are brought under GST regime.
Though the recent hike in oil prices took a toll on the citizens, it seems that the newly implemented GST system boosted the revenue collected by the state governments in India. Conferring with a report presented by SBI Research, 16 out of the 24 states which follow GST system saw an increase in their revenue collection above 14%, below which the states have to be compensated.
Indian industrial body, ASSOCHAM has suggested Indian government to reduce taxes over oil, and to bring the ‘black gold’ under GST regime. This decision might make India's exports competitive; bring down current account deficit and depreciation of Indian currency. Noting that higher crude prices adversely affect fiscal and current account deficits of the economy, ASSOCHAM recommends that reduction in oil duties will be advantageous to the country's exports.