Amid limited revenue options, states may resist fuel inclusion in GST
Finance Minister Nirmala Sitharaman has left the decision on whether to include petrol and diesel under goods and services to states, saying the central government has been more than ready.
Most states may, however, resist, reluctant to cede the few remaining lucrative levies after losing significant taxation rights with the GST’s implementation on July 1, 2017.
Petrol and diesel are not yet taxed under GST, along with natural gas and aviation turbine fuel (ATF). Instead, they are subject to VAT (value-added tax), central excise duty, and central sales tax. Petrol and diesel prices vary from state to state.
After the implementation of the GST, both states and Centre gave up the right to unilaterally impose taxes on various sectors with the former left with three crucial avenues to raise revenues — liquor, land and fuel.
