Synopsis: CBIC Chairman Sanjay Kumar Agarwal said it may not be possible to bring petrol and diesel under GST for now, citing heavy revenue dependence of both Centre and states on excise duty and VAT. Finance Minister Nirmala Sitharaman also confirmed that the decision lies with states.
The debate over whether petrol and diesel will be brought under the Goods and Services Tax (GST) has resurfaced. However, according to Sanjay Kumar Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), it is unlikely that these fuel items will be included in the GST framework anytime soon.
Currently, petrol and diesel are subject to central excise duty and value-added tax (VAT). These levies contribute significantly to both central and state revenues. While excise duty benefits the Centre, VAT collections form a major part of state finances.
“So, looking to the revenue implications, it may not be possible to bring these items under the ambit of GST for the time being,” Agarwal told IANS.
The remarks follow Finance Minister Nirmala Sitharaman’s statement last week, where she acknowledged that though the legal framework exists, states must collectively agree to the move. “Once the states agree, they have to decide on the rate of taxation in the council. Once that decision is taken, it will be put into the act,” she said.
Since the implementation of GST in July 2017, products like petrol, diesel, and alcoholic beverages were deliberately kept outside its scope. These commodities remain critical revenue streams, contributing 25-30% of tax revenue for several states.
Experts believe that until states feel assured of adequate compensation mechanisms, the inclusion of petrol and diesel under GST will remain uncertain. For now, the dual taxation system—VAT for states and excise duty for the Centre—continues.
Disclaimer: This article is for informational purposes only and is based on statements from government officials. Readers are advised to follow official GST Council notifications and policy updates for authoritative details.
