The GST Council has noticed to earn an extra Rs 1.87 lakh crore in FY21 from the Rs 13-16/litre further cess and surcharges imposed on auto fuels in March/May 2020. In this article, we will discuss on GST Council will decide on oil-in-GST.
GST Council will decide on oil-in-GST
Amid an objection for the cut in taxes on auto fuels to check their skyrocketing retail prices, finance minister Nirmala Sitharaman on Friday told a group of journalists at the Indian Women’s Press Corps that the government was not yet equipped with a plan to make these petroleum products under the goods and services tax (GST) regime, but symbolised that it might take a call on the issue closer to the GST Council meeting.
however, was non-committal on whether the states would be paid for any revenue shortfall arising out of the inclusion of these fuels under GST. Since a significant part of the Centre’s taxes on fuels is not shared with states, it would also have to estimate the revenue indications of the move.
Further Notification by Central Government
The central government also stated that the Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs, yielded ‘positive results’ with disbursements over Rs 1.9 lakh crore. however, also added that demand from MSMEs have now petered out as normalcy has gradually returned after Covid-induced lock-downs were lifted.
Since GST has decreased the states’ autonomous tax revenue space from 70% to 25% of their total tax receipts ( covering alterations from the Centre), the states are likely to maintain the proposal bring high-revenue items like auto fuels under GST; if at all they acquire, they would pitch for a formula to make up for any further erosion of their tax powers that such a choice could result in.
Currently, the central government levies a fixed rate of excise duty on the two auto fuels while states levy varying rates of VAT on an ad valorem basis on the base price that involves central taxes. Under the GST, the two would unite and bring regularity, solving the problem of fuel rates being higher in states with higher VAT.
Download E-Startup Mobile App and Never miss the freshest updates narrating to your business.