Will petrol and diesel come under GST..!?
Will petrol and diesel come under GST..!?
The GST Council, headed by Union Finance minister Nirmala Sitharaman, will decide to restructure taxes on life insurance, health insurance, lifestyle items, and many more at the 55th GST Council meeting to be held in Jaisalmer, rajasthan on december 21. One of the most important topics of discussion across india for the last few years is bringing petrol and diesel under the GST. The central government and the state governments have been imposing excessive taxes on the fuel used by the common man on a daily basis for tax revenue. Although there is a continuous demand to bring petrol and diesel under the GST regime to change this situation since the state governments get a lot of revenue from fuel sales and the central government refuses to increase the GST tax share for the state governments, everything including petrol and diesel remains outside the GST tax structure.
The GST Council, headed by Union Finance minister Nirmala Sitharaman, will decide to restructure taxes on life insurance, health insurance, lifestyle items, and many more at the 55th GST Council meeting to be held in Jaisalmer, rajasthan on december 21. One of the most important topics of discussion across india for the last few years is bringing petrol and diesel under the GST. The central government and the state governments have been imposing excessive taxes on the fuel used by the common man on a daily basis for tax revenue. Although there is a continuous demand to bring petrol and diesel under the GST regime to change this situation since the state governments get a lot of revenue from fuel sales and the central government refuses to increase the GST tax share for the state governments, everything including petrol and diesel remains outside the GST tax structure.
The main challenge in the current structure is that no company using aviation fuel is able to avail Input Tax Credit (ITC). The main reason for this is that aviation fuel is not within the ambit of GST. airlines purchasing aviation fuel are not able to avail of any benefits of the Input Tax Credit. This increases the burden on the profits of airlines. By bringing ATF under the ambit of GST, the government can simplify the taxation structure and remove the impact of tiered taxation. This will make air travel even cheaper.
If this journey is successful, there is a perception that petrol and diesel may be brought under GST in the next phase. This change is seen as very important as the committee headed by Dr. Arvind Panagariya is going to submit the 16th Finance Commission report to the central government in 2025 in direct consultation with several states. The recommendations on tax sharing submitted by Arvind Panagariya will be effective for the next five years starting from the financial year 2026-27.