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Early Inclusion Of Gas, ATF Into GST Fold Brightens

Early Inclusion Of Gas, ATF Into GST Fold Brightens

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  28 May 2019 9:28 AM GMT

NEW DELHI: At least two out of five petroleum products, including the aviation turbine fuel or ATF and natural gas, are likely to be among the first set of petrol products to be included in the GST ahead of an earlier agreed schedule. Sources said that with Modi government again set to take charge of thegovernment at the Centre, the prospect of twoproducts being included into the GST fold has brightened. The Finance Ministry has started preparing the ground for nextround of discussions at the GST Council with the proposal for taking out gas and ATF from GST first before evolvingconsensus on other petroleum products.

The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system andthe Finance Ministry could consider placing the proposal in the initial meetings of the Council after the new governmenttakes charge at the Centre.As part of its efforts to build consensus with states on GST launch, the previous Modi government had decided toexclude five petroleum products viz crude oil, petrol, diesel, ATF and natural gas from the list items placed under GST butincluded products such as cooking gas, kerosene and naphtha in the new regime.This created a messy situation for companies, as they were required to comply with both the old and new tax regimes.Moreover, tax credits were not transferable between the two systems.A member of the council had earlier said that though petroleum products were not kept out of the GST, its inclusion inthe regular tax system might have to wait at least for a year by when the revenue impact of GST would be better known.

The government hopes that the Goods and Services Tax collections would be well over Rs 1 lakh crore mark in all months of FY20 easingpressure on the revenue to bring in next wave of reforms. In April, the GST collection had already shot up to record levelof Rs 1.13 lakh crore.“ATF may be the first among petrol product still outside GST. Inclusion of natural gas could be next or may be donesimultaneously with ATF,” said government source privy to the development.The jet fuel price’s inclusion would allow airlines to take an input tax credit on the GST paid thus bringing down theeffective cost. Similarly, GST levy on natural gas would help state-run oil companies such as ONGC, IOCL, BPCL andHPCL to save tax burden to the tune of Rs 25,000 crore as they would get credit on taxes paid for inputs and services. Taxcredits are not transferable between the two different taxation systems.Experts said that the ATF price would come down if it is kept in the 18 per cent GST bracket and no other surcharge islevied. The lower fuel cost would mean ticket prices going down for air-travellers.

It would benefit corporate travellers themost as they would be able to claim a credit on Goods and Services Tax paid besides their effective tax rate would also come down. Fuelaccounts for nearly 30-40 per cent of an airline’s operating cost.Inclusion of gas would not pose a challenge for the Goods and Services Tax Council as it is largely an industrial product where a switchover to new taxation would not be difficult. The revenue implication for the States is also low in the case of thisswitchover.Earlier, former Oil and Petroleum Minister Dharmendra Pradhan had also made a strong case for the inclusion of naturalgas in GST saying that if polluting coal can be included, then the environment-friendly fuel certainly deserves a place inthe new regime. He also favoured bringing others petro products under the GST gradually.Gas sales, including CNG and piped gas supplies, attract VAT ranging from 5-12 per cent. (IANS)Also Read: BUSINESS

Also Read: BUSINESS

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