45th GST Council meet | Petrol, diesel won’t be brought under GST regime: Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman

Meanwhile, Finance Minister Nirmala Sitharaman, who chaired the first in-person GST Council meet held since the outbreak of the coronavirus pandemic said on September 17 that the Council has decided against bringing petrol and diesel under the GST regime yet.

She said at the GST Council meeting 2021: “The issue of petrol and diesel was discussed. Several states said they do not want to bring these under GST. It was decided that the Council should report to Kerala High Court that the matter was discussed. The Council felt it was not time to bring petrol and diesel under GST.”

Delhi Finance Minister Manish Sisodia had earlier said at the 45^th GST Council meet held in Lucknow on September 17 that this is not the right time to decide if petrol and diesel should be brought under the Goods and Services Tax (GST) regime.

Sisodia added that a “lot of revenue considerations are involved and more discussion on the topic is needed” before any changes are introduced.

Central excise and state VAT (Value Added Tax) make up for almost half of the retail selling price of petrol and diesel. Bringing them under the GST would impact revenue generation for the states.

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If petrol and diesel come under the GST regime, prices will become mostly uniform across all states as the different excise and VAT rates that the Centre and the states impose would then be done away with. This would help bring down diesel and petrol prices greatly, which has touched new highs in the recent past.

However, a huge chunk of revenue of both the Centre and states come from the tax collected from petrol and diesel sale and if a uniform GST is levied, the amount will have to be shared equally between the state governments and the central government.

With these factors in mind, Maharashtra Deputy Chief Minister and Finance Minister Ajit Pawar also said that if the tax structure is altered by the Union government in a way that adversely impacts the states’ revenue, the move will be opposed.

A day ahead of the GST Council meeting, even the Kerala government had said that it will vehemently oppose any move to bring petrol and diesel under the GST regime as that will further reduce revenue generation for the state and asserted that the Centre should reduce its levies on the two commodities to provide relief to the common people.