New Delhi: The states did not agree to include petrol and diesel in the GST during the last GST Council meeting as they want some maneuverability to raise funds during crisis, said government sources.
“Not a single state supported to include petrol and diesel under the GST during the last meeting. No state in the country was willing to support it,” said a senior government official.
The issue to include petrol and diesel under GST was raised by the Centre during the GST meeting. However, states raised the issue that they also needed some flexibility to raise resources.
“States, especially Kerala pointed out that with everything being brought under GST, state maneuverability to raise resources has come down. They said that products which are outside GST should remain outside of GST,” he said.
“Kerala is facing a natural calamity and if they want to mobilise additional resources to deal with the situation they should be allowed to have that,” said the official.
Sources in the government pointed out that while many opposition parties are raising the issue of cutting tax on petrol and diesel, Karnataka recently raised taxes on fuel. “This only shows that the demand is only political,” said sources.
Petroleum ministry has been demanding to bring petrol and diesel on GST to give relief to consumers from high prices.
The total tax incidence on petrol comes to 45-50 per cent and on diesel, it is 35-40 per cent.
Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel.
On top of this, states levy Value Added Tax (VAT) — the lowest being in Andaman and Nicobar Islands where a 6 per cent sales tax is charged on both the fuel.