Petroleum products should be included under the proposed Goods and Services Tax (GST) regime, even as a final decision would be taken when the state governments come on board on it, the petroleum ministry said on Monday.
Replying to questions in the Lok Sabha, petroleum minister Dharmendra Pradhan said a combined 52 per cent tax is levied on petroleum products by both Central and state governments and such revenues are used for various welfare and infrastructure projects.
He said state governments are free to fix the amount of tax they want to levy on petroleum products as every state has its own aspirations and development projects which they carry out through the revenue generated from the sale of petroleum products.
Around 32 per cent tax is levied by the Central government on petroleum products while around 20 per cent by state governments, he said. “We are a welfare state and the government is committed for the welfare of the people and the country. The taxes levied by the Central and state governments are used for various infrastructure and social sector projects,” he said during Question Hour. Pradhan said in principle, the petroleum products should come under the ambit of the proposed Goods and Services Tax but a final decision would be taken when the state governments come on board on it.
The Minister said ever since the NDA government came into power in May 2014, prices of petrol and diesel were reduced 19 times and enhanced seven times. He said the prices of petrol and diesel have been made market-determined with effect from June 26, 2010 and October 19, 2014 respectively.
“Since then, the public sector oil marketing companies take appropriate decision on price of these products in line with changes in the prices in international market and other market conditions,” he said.
A panel headed by Chief Economic Adviser Arvind Subramanian had in a recent report said it would be advisable, at an early stage in future, to consider bringing fully into the scope of the GST commodities that were proposed to be kept outside. It said bringing items such as alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation without compromising on states’ fiscal autonomy. “Bringing electricity and petroleum within the scope of the GST can make Indian manufacturing more competitive…,” the panel said in the report.