Union Finance Minister Nirmala Sitharaman has clarified that petroleum products and alcohol are unlikely to be brought under the ambit of the GST in the immediate future. Speaking in an interview, she said, "The current proposal does not include it. Not in the immediate future."
When GST was rolled out in July 2017, petrol, diesel and alcohol were deliberately kept outside the new indirect tax regime, as they represent critical revenue streams for both the Centre and states through excise duty and value-added tax (VAT). States have consistently opposed their inclusion in GST, fearing a significant erosion of fiscal autonomy and revenue loss.
This exclusion has meant that taxes on these commodities continue to be levied separately, contributing to persistently high retail prices despite GST simplifying taxation for 99% of other goods and services.
FM Sitharaman highlighted that under the newly approved GST 2.0 framework, almost all items now fall within three simplified slabs - 5%, 18%, and 40%. "Ninety-nine percent of all goods and services touched by GST are now either in zero, 5%, or 18%. Only 1% falls under the 40% demerit rate," she said, pointing to the government's efforts to streamline the system and remove anomalies.
On September 3, the 56th GST Council meeting chaired by Sitharaman approved significant rate cuts across categories, including essential items like shampoo and hair oil, as well as automobiles and electronic goods. The reforms, set to take effect from September 22, mark a major step towards reducing classification disputes and easing compliance.
While petrol, diesel and alcohol remain out of GST for now, experts believe their eventual inclusion will require strong consensus between the Centre and states. For the moment, the government has signaled that fiscal stability and state revenues will take precedence.
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