Finance Minister Nirmala Sitharaman said on March 23 that the central government is ready to start discussions on bringing petrol and diesel under Goods and Service Tax (GST) if the states are on-board for talks as well.
Replying to the debate on the Finance Bill, Sitharaman also pointed out to a number of amendments made to the bill since its tabling on February 1, including a 10-year tax holiday for the new National Bank for Financing Infrastructure and Development (NaBFID), and a 5-year tax holiday for any privately held development finance institution, which can also be extended to 10 years.
The amendments also changed the rule on taxability of interest on excess contribution by employees to the their employee provident fund (EPF). Previously, interest was taxed for any contribution above Rs 2.5 lakh per year. It has now been increased to Rs 5 lakh provided the employer does not contribute.
The Lok Sabha passed the Finance Bill, providing legal backing to the Union Budget 2021-22, and giving effect to tax proposals in it. It will now go to Rajya Sabha, but being a 'money bill' does not necessarily need the Upper House's consent.
"Many members from across parties have raised the issue of bringing petrol and diesel under GST. The states are also listening to this debate. I assure you that if the states wish so, we are ready to discuss this matter in the next GST Council meeting," the Finance Minister said.
Moneycontrol had reported last week that the Centre is willing to discuss the possibility of bringing petroleum products under GST, in the backdrop of record petrol and diesel retail prices.
In Lok Sabha, the Finance Minister said that the proceeds from the Agriculture Infrastructure and Development Cess, announced in the Budget, will eventually be passed on to the states. This is significant as a cess by definition is not part of the divisible pool to be devolved to states.
"The proceeds from the cess will be used to create more infrastructure for agriculture, farm yards and marketing yards. This all comes under states and hence the money will eventually go to states," she said.
In the Budget, Sitharaman had said: "There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers. To earmark resources for this purpose, I propose an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items."
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