The matter has been inflated by the prime leadership, members of parliament (MPs) and the industry, a proposal to levy GST on petroleum commodities and its dividend implications for the Centre and states would be worked out and placed before the GST Council soon, which will take an ultimate call on this matter, they said requesting anonymity. In this article we will discuss on Natural gas, jet fuel may come under GST.
Natural gas, jet fuel may come under GST
At least two petroleum commodities – natural gas and aviation turbine fuel (ATF) – could be brought under the Goods and Services Tax (GST) net to facilitate a gas-based economy and to furnish a stimulus to the pandemic-hit aviation sector after the GST Council’s approval, two people aware of the development announced on Friday.
As the issue has been put up by the top leadership, members of parliament (MPs) and the industry, an undertaking to levy GST on petroleum products and its revenue implications for the Centre and states would be calculated and placed before the GST Council soon, which will take a final call on this matter, they asserted requesting anonymity. Five petroleum commodities – crude oil, natural gas, ATF, petrol and diesel are outside the GST structure.
The government is devoted to bringing natural gas under the GST regime as uniformity of tax would direct to a reduction of cost of natural gas and improve its usage across industries. There is no central excise on natural gas in its gaseous form, but compressed natural gas entices 11% duty. Value-added tax (VAT) on natural gas, however, varies depending on from state to state in the range of 6% to 24.5%.
After several MPs brought up the question of bringing petroleum products under GST, the finance minister assured them that the matter would be placed before the GST Council.
Further Notification by Central Government
Further a point has been brought up about bringing diesel and petrol under GST. Also, the Central and state taxes on petroleum products contributed over ₹5.55 lakh crore in 2019-20, and diesel and petrol are the two largest revenue earners in that order.
In a memorandum to the government to furnish relief to pandemic-hit sectors, the Confederation of Indian Industry (CII) proposed to carry ATF under the ambit of GST. Getting ATF under GST would provide long-term relief to the airlines. Inclusion under GST should allow full input tax credit on all goods and services.
While central excise on ATF is 11%, VAT rates on the jet fuel vary between zero to 30% relying on states. Chartered aircraft are imposd about 18% tax on full invoice value.
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