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Key Points

CBIC Chairman Sanjay Agarwal explained that bringing petrol and diesel under GST isn't feasible currently due to revenue implications. These petroleum products provide significant income to both central and state governments through excise and VAT. Finance Minister Nirmala Sitharaman noted that while legally ready, the decision requires states' agreement in the GST Council. States are concerned about losing taxation control and revenue that contributes substantially to their budgets.

Key Points: CBIC Chief Sanjay Agarwal Says Petrol Diesel GST Not Possible Now

  • Petroleum products generate substantial revenue through excise duty and VAT
  • States fear losing control over taxation policy and pricing
  • Some states rely on fuel taxes for 25-30% of revenue
  • Finance Minister says decision requires states' agreement in GST Council
2 min read

It may not be possible to bring petrol, diesel under GST for time being: CBIC chief Sanjay Agarwal

CBIC Chairman Sanjay Agarwal states petrol and diesel cannot be brought under GST due to major revenue implications for both central and state governments.

"So, looking to the revenue implications, it may not be possible to bring these items under the ambit of GST for the time being - Sanjay Kumar Agarwal"

New Delhi, Sep 10

As discussions continue to bring petrol and diesel within the ambit of Goods and Services Tax (GST), Chairman of the Central Board of Indirect Taxes and Customs (CBIC) Sanjay Kumar Agarwal said it may not be possible to bring these items under the indirect taxation for the time being.

Asked if petrol and diesel should be brought under GST, Agarwal told IANS that petrol and diesel are presently subject to central excise duty and value-added tax (VAT), as these two petroleum items fetch a substantial revenue to the states by way of VAT and to the Central government by way of central excise duty.

"So, looking to the revenue implications, it may not be possible to bring these items under the ambit of GST for the time being," he added.

The CBIC Chairman's comment came as Finance Minister Nirmala Sitharaman said last week that the Central government intentionally did not include petrol and diesel in the GST Council proposal.

"Legally, we are ready, but this decision must come from the states," she said.

According to her, petrol and diesel were set to figure, "even when GST was implemented, I remember my late predecessor Arun Jaitley talking about it".

"Once the states agree, they have to decide on the rate of taxation in the council. Once that decision is taken, it will be put into the act," FM Sitharaman noted.

In the GST implemented in July 2017, products like petrol, diesel, and alcoholic beverages were kept outside its ambit since then.

These commodities are major revenue sources for both the Central and state governments through excise duty and VAT. For several states, these contribute over 25-30 per cent of their tax revenue. States fear losing control over taxation policy, pricing, and the ability to influence consumption patterns through excise duty and VAT.

- IANS

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Reader Comments

P
Priya S
Actually, this makes sense from revenue perspective. States depend heavily on fuel taxes for development projects. Sudden shift to GST would create huge funding gaps for infrastructure and welfare schemes.
A
Aman W
Both Centre and States are playing blame game. They want to keep this cash cow for themselves while common man pays ₹100+ per liter. This is why "One Nation One Tax" remains incomplete.
S
Sarah B
As someone who travels frequently between states for work, the varying fuel prices due to different state taxes is really confusing. GST would bring much-needed uniformity across India.
V
Vikram M
They should at least create a roadmap for gradual inclusion. Start with partial GST component and phase out state taxes over 3-4 years. This endless "not possible for time being" is frustrating for citizens.
N
Nisha Z
While I understand the revenue concerns, the government should also consider how high fuel prices affect inflation across all sectors - from vegetables to transportation. There has to be a balanced approach.

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