The Union Territory has opposed the inclusion of petroleum products under the purview of Goods and Services Tax.
The Union Territory’s case against the inclusion of petrol and diesel under the GST was made by Minister for Public Works K. Lakshminarayanan, who represented Chief Minister N. Rangasamy, who holds the Finance portfolio, at the GST Council meeting on Friday.
Mr. Lakshminarayanan, in his representation which was released to the media here, said, “For implementation of GST, State governments have surrendered their fiscal autonomy. At present, the State governments have autonomy only in taxing petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel (ATF) and alcohol.”
The State governments get considerable revenue from VAT on petrol. If the Centre brings petrol and diesel under the GST, the revenue of State governments would be adversely affected, he said.
As far as the Union Territory was concerned, Mr. Lakshminarayanan said, VAT on petrol and diesel constituted nearly 46% of the revenue from commercial taxes (VAT and GST). The U.T. already suffered revenue loss after the introduction of GST and the resultant due to structural issues. The GST compensation payment would end by June next. The Union Territory would incur a huge loss if petrol and diesel were brought under the GST.
“The date of bringing petroleum products under the GST is a policy decision exclusively within the domain of the GST Council. Hence, a decision on inclusion of petrol and diesel need not be taken by the Council since we are most worried about revenue collection,” he said.
On the GST implementation, the Minister, in his representation, said Puducherry suffered 62% revenue loss for 2020-21 due to structural issues.
“Due to uniform tax rate, the market in Puducherry is no more attractive for people of neighbouring States. Had we continued under the VAT regime, the U.T. would have earne ₹1,536 crore in 2020-21 as against ₹667 crore revenue from the GST,” the Minister said.
