Finance secretary Hasmukh Adhia has revealed that there could be a Goods and Services Tax soon for petroleum products. The implementation however is expected to go up in phases.
Adhia was speaking at an event and was quoted in a PTI report as saying that, "One of the demands that is there before us, we will see... everything will happen in stages."
The Chairman for Central Board of Indirect Taxes and Customs' S Ramesh conceded that there has been a demand for bringing petroleum products under GST, but the council had to finalise various modalities.
At the moment diesel, petrol, crude oil, natural gas and aviation turbine fuel are outside the ambit of the goods and services tax. Various state governments have the liberty to impose value added taxes on petroleum products.
Consumers are hopeful that a GST on petroleum products could provide some relief. Although petrol and diesel prices have marginally cooled after oil marketing companies consistently maintained or slashed prices in two fortnights. But on Thursday retail prices were hiked.
Besides disgruntled consumers, the civil aviation ministry is hopeful that GST implementation will help it reduce incidences of higher tax rates on ATF (Aviation turbine fuel), that results in costly operational expenses and has a baring on air fares. The aviation ministry in a note to the finance ministry sought the inclusion of jet fuel under the indirect tax regime with full input tax credit at the earliest.
Officials from the finance ministry were reported of favoring the option to include natural gas and ATF within the purview of the goods and services tax, but nothing has been official yet.
"We have done a lot but that it does not mean that there is no scope for betterment of the existing system. We still believe that we need to do a lot more and we are working in that direction," Adhia said.
With regards to issue of automation of refund, he said it was meant to be automated from day one but tax-payers made mistakes in filing returns. The errors prompted the income-tax department to get into manual mode at the last moment.
He is hopeful of getting the system automatic. "We are again trying to make it completely automatic, the entire refund process. This is next thing. In terms of simplification of rates, slabs, we do understand need for it but we did what was best in the given scenario." he conceded.
"We could not have done anything other than this because we had to take care of revenue, we had to take care of concern of poor. Certainly we must move in that direction of something better than that," the secretary added.
A few weeks ago, practice heads from Khaitan and Company explained during round-table, the need for GST on petroleum products.
Abhishek Rastogi, Partner at the law firm said GST for petroleum products had to be implemented in the current financial year. He highlighted the challenges that petroleum refiners faced in seeking compliances at both levels- Retail as well as job workers as a big issue. Moreover certain transactions were confusing for the oil and marketing companies.
For instance, "Bitumen is taxable under GST, but ATF and Motor spirits were not," he said referring to the crude products that are refined from the same ingredients but subjected to different tax rates.
"If you have multiple taxes, it will increase the compliances. With GST, the idea is to reduce compliances and to make everything online, in sync with the spirit of one nation, one tax," he elaborated during this round-table.