Petrol and diesel prices have witnessed major fluctuations over the past few months. The rising prices of the fuels have repeatedly churned the debated topic of bringing the fossil fuels under the Goods and Services Tax (GST) regime in the country.
After the introduction of GST in 2017, a total of five commodities including petrol, crude oil, diesel, natural gas, and aviation turbine fuel (ATF) were not brought under the GST regime. This decision was taken on the basis of the fact that the state governments and the Central Government are dependent on the revenue earned from the sale of the aforementioned commodities.
Effects of bringing fuel under GST regime
Recently, the GST Council had met for the 45th GST Council Meeting. This was the first physical meeting held by the Council since 18 December 2019. One of the most anticipated topics for the latest meeting was the inclusion petroleum products under the GST regime.
Although the price of fuel is likely to go down substantially if it is brought under the GST ambit, it is likely to take a long time to implement the same. One of the major setbacks in this regard is the fact that a number of the states in India are against the implementation of GST on the fossil fuels. The states are dependent on the revenue generation from the sale of the said commodities.
Outcome of the GST Council Meeting
The latest GST Council Meeting was held on 17 September 2020 wherein the inclusion of petrol and diesel under the GST regime was discussed. However, the Finance Minister of India Nirmala Sitharaman announced later that the council has decided that the fossil fuels cannot be brought under the ambit of the indirect tax at this point in time.
That said, even if the fuels are being brought under the regime of the Goods and Services Tax in the future, it is likely to take a long time to be put into effect.