State wants Petrol kept out of GST list

Dated 3rd December, 2014

A crucial meeting of the high-powered committee on goods and services tax (GST) will be held in New Delhi on December 11. Punjab Finance Minister Parminder Singh Dhindsa, who is a member of the committee headed by the Jammu and Kasmir Finance Minister, said that besides thrashing out issues related to the GST, the committee would meet Union Finance Minister Arun Jaitley. The latter is to introduce the Bill on the GST during the current session of Parliament.

Dhindsa said Jaitley would introduce the Constitutional Amendment Bill related to the GST and then another Bill regarding the tax rates fixed under the GST.

There are certain issues on which a general consensus remains to be achieved by various stake- holders. One is that of petrol. States want that this commodity be kept out of the GST list and states be at liberty to decide the tax rate on petrol on their own. However, the Centre insists that it should be included in zero per cent tax slab and the states should be allowed to fix the tax rate at their own level. Punjab charges nearly 33 per cent tax on petrol while other states have kept it up to 20 per cent. Hence, the petrol price varies from state to state. The other issue pertains to allowing Punjab to continue charging various taxes and cess on food grain procured for the central pool. Punjab wants the Centre to make a provision in the proposed GST Act for compensation to states for any revenue loss incurred on the procurement of food grain for the central pool.

The Centre has assured all states that it will compensate them for three years to five years for any loss suffered by them on account of the introduction of the GST in the country. After that, the states would have to mobilise their own resources to meet any losses.

Dhindsa claimed there would be neither any major gain nor loss to Punjab when the GST was introduced. The revenue level would remain the unaltered, he added.