BUSINESS

FM asks states to cut VAT on petro products

Arun Jaitley

Arun Jaitley  

Finance Minister Arun Jaitley has written to all Chief Ministers urging them to reduce Value Added Tax (VAT) on petroleum products used in the manufacture of goods as the current system was leading to cascading of taxes on such goods under the Goods and Services Tax (GST) regime.

Currently, crude oil, natural gas, petrol, diesel and aviation turbine fuel are out of GST purview. All other petroleum products fall under the new indirect tax.

“The letter by Finance Minister highlights a concern being raised by the manufacturing sector in the country regarding the rise in input costs of petroleum products happening on account of transition to Goods and Services Tax regime,” the Finance Ministry said. “In the post-GST scenario, manufactured goods attract GST while inputs of petroleum products used in the manufacturing attract VAT and, therefore, it would lead to cascading of taxes.”

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