CBIC chairman: GST council need to bring petroleum products under the ambit of GST

Last updated: 12 June 2022

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The Chairman of the Central Board of Indirect Taxes and Customs (CBIC), Vivek Johri, has stated that the GST Council should consider bringing petroleum products under the Goods and Services Tax (GST) regime. While states have previously expressed concerns about potential revenue loss, Johri believes that as GST collections improve, their stance may soften. He highlighted that including petroleum would allow for a free flow of Input Tax Credit (ITC), benefiting the logistics and transport sectors, and potentially lowering costs across the economy. Johri also suggested that states could compensate for any perceived revenue loss by levying other taxes, such as excise duty or sales tax, on petroleum products over and above the GST.

The Union government has estimated the monthly GST collection at over Rs 1.2 lakh crore, said Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri on Saturday. He added that theres a need for the GST council to deliberate bringing petroleum products under the ambit of GST. The major concern states have had in the past is the adverse impact on their revenue, he told TOI. All states levy VAT on sale of petroleum products, which are not under GST. This apprehension was strong

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FAQ :

The Union government estimates monthly GST collection to be over Rs 1.2 lakh crore, with expectations of a higher average between Rs 1.25-1.3 lakh crore.

Petroleum products are not under GST because states levy VAT on their sale and have historically been concerned about adverse impacts on their revenue and losing fiscal independence.

Bringing petroleum products under GST would allow for a free flow of Input Tax Credit (ITC) within the value chain, benefiting the industry, logistics, and transport sectors, and potentially reducing overall economic costs.

States can compensate for perceived revenue loss by levying other taxes, such as excise duty, VAT, or sales tax, on petroleum products over and above the GST, similar to practices in other countries.

The CBIC chairman expressed confidence that monthly GST collections will remain above the Rs 1 lakh crore mark, with a higher average expected due to economic revival and the bounce-back of the services sector.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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