Petrol under GST regime – Where there’s a will…

If oil companies cut the inflation buffer to Rs 5, the cost at their end works out to Rs 50 a litre and even the FM decides to impose the maximum permissible GST of 28 per cent, we can get petrol at Rs 64 a litre. This means that consumers can save anything above Rs 40 a litre. This is what all about putting some money in the consumer’s pocket. And this will allow him to start saving and spending on other things. Either way, the government can make money on further taxes and command increased savings

One Nation- One Tax. Thus screamed the Centre (read NDA) when it launched Goods and Services Tax (GST) on July 1, 2017. But the most commonly used commodity – fuel – was not included in the list of items for applying GST. Even seven years after the dawn of the new tax era, we are yet to see crude oil, natural gas, petrol, and diesel and aviation turbine fuel under the GST list.

Union Finance Minister Nirmala Sitharaman says the Centre is willing to cover fuel items under the GST, but it is for the States to decide on it. This is a convenient way of passing the buck and forgetting the adage – where there is a will, there is a way. NDA led by BJP today rules in 19 states and one union territory. If the PM and FM want they can easily implement the GST on fuel in their states and thus force others to opt for the same taxation system. What is more, the government does not even have to make any amendment as late Arun Jaitley had made provision for GST on fuel. This was confirmed by Nimala Sitharaman herself.

Let us look at the price scenario. Crude oil costs Rs 40 per litre and processing cost varies from Rs 5.66 for petrol to Rs 6.42 for diesel, according to cleartax.in. Then the oil companies keep a buffer of Rs 10 per litre. This is also questionable since the headline inflation as per the RBI is just about 5 per cent and there is a scope to reduce the oil companies’ buffer.

The Centre imposes an excise duty of 20 per cent on petrol and it is uniform across India. Then comes the burden of Value Added Tax (VAT) being collected by States and Union territories which varies from 1 per cent in Andaman & Nicobar to a whopping 35.2 per cent in Telangana. Andhra Pradesh collects 31 per cent VAT plus Rs 2 as road development tax. Maharashtra charges 25 per cent VAT in and Mumbai and neighbourhood and 26 per cent in rest of the State, plus an additional tax of Rs 5.12 across all districts. Other heavy VAT states include Kerala (30 per cent), MP (29 per cent) Karnataka (25 per cent) and Assam (23.45 per cent).

If oil companies cut the inflation buffer to Rs 5, the cost at their end works out to Rs 50 a litre and even the FM decides to impose the maximum permissible GST of 28 per cent, we can get petrol at Rs 64 a litre. This means that consumers can save anything above Rs 40 a litre. This is what all about putting some money in the consumer’s pocket. And this will allow him to start saving and spending on other things. Either way, the government can make money on further taxes and command increased savings.

Hence, dear FM, just bring petrol (and other fuels) under the GST and enjoy the fruits of the cascading effect. Affordable fuel will also encourage an increased number of people to buy two-wheelers and cars which will help the entire automobile industry chain – from manufacturers to ancillaries to dealers and general insurance companies. Of course, there is a pressing need to cut GST on two-wheelers, at least, as this segment caters to the not-so-wealthy people. The Federation of Automobile Dealers Association (FADA) has been pleading with the government on this issue with no response, as usual.

The recent GST Council meeting deliberated on keeping the tax on real estate to bare minimum, says Goa CM Pramod Sawant who heads the Group of Ministers (GoM). GST of 1 per cent for affordable housing and 5 per cent for other home sales is applicable now.

Since its implementation, the government admits, the Indian GST has undergone various amendments and refinements based on feedback from businesses and the evolving economic scenario. While the GST implementation initially posed challenges for businesses in terms of understanding the new compliance requirements and adapting to the changes, it has gradually settled into the Indian tax landscape.

It can be said that the history of GST in India showcases a monumental shift in the country's tax structure, aiming to create a more unified, efficient, and transparent indirect tax regime for the benefit of businesses and the economy as a whole, the government says.

These official statements are truly a treat to our eyes since they come from a government led by Narendra Modi, who as the Gujarat CM, had vehemently opposed the GST proposed by the Manmohan Singh Government without proper IT infrastructure and taking into confidence the manufacturing states such as Gujarat, Maharashtra and Tamil Nadu. Congress vice president Rahul Gandhi had criticised PM Modi for hurrying through the GST and said: “A reform that holds great potential is being rushed through in a half-baked way with a self-promotional spectacle”. Even now, Rahul Gandhi picks up wrongly implemented GST, apart from the demonetisation, as the banes of the Modi government.

GST is also said to be one of the most amended laws. There have been as many as564 amendments or insertions, 87 retrospective and 477 prospective amendments to the GST Law.

Rahul Gandhi promised during the recent Lok Sabha poll rallies that the INDIA bloc would simplify the GST to just one slab from the existing five.

One of the controversial GST provisions that raised a storm recently was the 18 per cent tax on health and life insurance premia which Union Transport Minister NitinGadkari described as taxing the uncertainty. The opposition quickly latched onto this and even held demonstration at Parliament demanding scrapping the GST on insurance premiums. Now there are reports that the GST Council might consider this issue in its next meeting on September 9.

As regards bringing fuel under GST regime, Gadkari had himself suggested this and pointed out that the States’ tax collection would improve.

President Droupadi Murmu gave the traditional curd and sugar mix to Finance Minister Nirmala Sitharaman before the FM presented this year’s budget as a goodwill gesture. Well, we will definitely say, ‘aapkaymuhmein ghee-shakkar’ when Sitharaman brings petrol under GST.

(The columnist is a Mumbai-based author and independent media veteran, running websites and a youtube channel known for his thought-provoking messaging.)