GST Council to decide VAT on petroleum products

The Dollar Business Bureau

Deepak Vasant Kesarkar, Minister in the Maharashtra state government, informed the Legislative Council on Sunday that continuation of value-added tax (VAT) on alcohol and petroleum products will be decided by Goods and Service Tax (GST) Council in the coming 5 years.

Responding to a debate in the Upper House of the state on the Maharashtra Goods and Service Tax Laws (levy, amendment and validation) Act 2017, Kesarkar said that it is even not possible for the Central government to transfer in one go the 25% tax rate on petroleum items under the new GST regime.  

The minister also clarified that the Maharashtra government has already taken a decision to not increase the tax on diesel because it is being used in the transport of goods and any hike would correspondingly impact the prices of products such as fruits, vegetables, food grains etc.

Kesarkar, who handles the Finance and Planning portfolios in the state government, said that VAT on diesel is therefore shifted on petroleum products.

“The tax structure under the GST regime will be reviewed by the GST Council after five years,” he said.

Replying to questions raised by members on taxing agriculture, the minister gave assurance that tax on agricultural income will continue to be at 0%.

Responding to queries over the demonetisation effect on the collection of tax revenues in the state, he said that after-demonetisation the revenue income of the state has surged by 14%.

“The revenue of state will rise as more people are brought under the GST regime,” he added.

Later, the Legislative Council unanimously cleared the tax laws bill that was earlier approved by the lower house on May 20.