InvestorQ : Do you think it is likely that the petrol and diesel would be brought under the GST regime, as has been demanded?
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Do you think it is likely that the petrol and diesel would be brought under the GST regime, as has been demanded?

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Juvina Maggie answered.
8 months ago
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GST on petrol and diesel has been a controversial topic for a long time even as opposition parties have been demanding that petrol and diesel be brough under GST. When GST was first introduced in 2017, the some of the products like petrol, diesel, other oil products and liquor were kept out of the list as they were big sources of revenues for the states and it would be tough to get the buy-in of states for this decision.

In a recent interview, the finance minister, Nirmala Sitharaman, agreed to discuss the subject of GST on petrol and diesel at the next GST Council meet. However, another BJP strongman from Bihar, Sushil Modi, has been consistently quite emphatic that GST on petrol and diesel was not feasible even in the next 8-10 years. That is because petrol and diesel levies at a state level account for a major chunk of the state revenues.

Sushil Modi has made his point quite clear that no state would be willing to face annual overall revenue loss of Rs.200,000 crore in the current financial situation. Currently, the centre and states collectively earn Rs.500,000 crore as tax on petroleum products. Congress has been on the forefront demanding that petrol and diesel should be brought under the GST regime.

Sushil Modi has however pointed out that despite the demands made by the Congress party, not a single state leader or state finance minister who sits on the GST Council from the Congress had raised this issue. If petrol and diesel are put under GST, then the centre will have to compensate states for the annual loss of Rs.200,000 crore. In the current fiscal constraints, that surely looks very difficult and far-fetched.

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