With prices of petrol and diesel sky-rocketing, the clamour for bringing petroleum products under the Goods and Services Tax (GST) grows louder once again. The current tax structure on petroleum, oil and lubricants (POL) products has led to multiple taxes, making prices in India one of the highest in the world.
However, levying GST on POL products has been a bone of contention between the states and the Centre since GST was introduced in 2017. Each state has its own structure for taxing POL items, so the state governments are worried that they would lose their fiscal autonomy if these products become a part of the GST regime. Also, these products are among key revenue generators for states, which could be keeping them from showing the political will to agree the Centre on this matter. It is expected that at the upcoming GST Council meeting in March, this topic will be taken into consideration.
The research arm of State Bank of India (SBI), has recommend a tax structure for petrol and diesel if GST has to be levied on it, to understand its impact on government’s finances.
