Petrol, diesel under GST? Not possible for 8-10 years: Sushil Modi

BJP leader Sushil Kumar Modi said on Wednesday, March 24, that it is not viable to bring petrol and diesel under the GST (Goods and Services Tax) ambit for the next eight to 10 years as it would result in an annual revenue loss of Rs 2 lakh crore to all state governments.

Speaking in Rajya Sabha while participating in a discussion on the Finance Bill 2021, Modi told the lower house of Parliament that the Centre and states combined collect over Rs 5 lakh crore tax on petroleum products.

His statement assumes significance in the wake of the increase in petrol prices over the past year which even touched Rs 100 per litre in some states.

Also Read: Petrol, diesel prices cut for first time in 2021; check out rates in top cities

Petrol and diesel prices were cut for the first time in 2021 following a steep decline in global crude oil prices. State-owned oil marketing companies (OMCs) on Wednesday, March 24, slashed fuel prices by 18 paise (petrol), and 17 paise (diesel) respectively.

Petrol price was cut to Rs 90.99 per litre in Delhi from Rs 91.17 a litre. Diesel now costs Rs 81.30 a litre in the national capital, down from Rs 81.47 previously.

Rates have been reduced across the country and vary from state-to-state depending on the local incidence of taxation (VAT).

Modi explained that if petroleum products are brought under the GST, 28 per cent tax would be collected on them as that is the highest slab in the tax regime.

"Presently, 60 per cent tax is being collected on petroleum products. This would result in a shortfall of Rs 2 lakh crore to 2.5 lakh crore (to both Centre and states)," he explained in the House.

"If we collect 28 per cent tax on petroleum products, then only Rs 14 would be collected (per litre) against Rs 60 at present," he pointed out.

"If petrol or diesel price is Rs 100 (per litre) then the tax component is Rs 60 which includes Rs 35 for Centre and Rs 25 for respective states. Besides out of the Rs 35 tax per litre, 42 per cent goes to states," Modi added.

Also Read: Petrol, diesel prices remain unchanged amid possibility of tax cuts

He also stated, "It is said that tax collected on petrol, diesel goes into the pocket of the government. There is no separate pocket of the government. From where the money will come to provide electricity and tap water to all households. The spending of tax collection on the welfare of the country is being challenged."

Reacting to remarks against the GST regime, he said, "Some people also said that this is Gabbar Singh Tax. No state has opposed the tax structure of GST in any GST Council meeting. You can see the proceedings of the council (to verify that)," he said.

He stressed that only the government under the leadership of Prime Minister Narendra Modi had the guts to implement the GST regime in the country.

(With inputs from PTI.)