Pradhan expects the next budget to signal the inclusion of ATF and natural gas in GST
New Delhi, December 5 () The Minister of Petroleum, Dharmendra Pradhan, expected on Thursday that Finance Minister Nirmala Sitharaman would signal the inclusion of jet fuel and natural gas in the GST field to reduce the multiplicity of taxes and Improve the business climate.
When the Goods and Services Tax (GST) was introduced on July 1, 2017, amalgamating 17 central and state levies, five basic products, namely crude oil, natural gas, gasoline, diesel and aviation turbine fuel (ATF ) were out of reach given the dependence on state government revenues in this sector.
Our expectation is that in the next Budget, ATF and natural gas will be included in the GST, he said at a FICCI conference here.
The Minister of Finance will present the Union Budget for fiscal year 2020-21 on February 1.
The inclusion of ATF and natural gas will not only help companies establish the taxes they paid for the inputs, but also bring uniformity in taxes on fuels in the country.
It is said that including natural gas in GST is one of the main drivers not only of consumption, but will also encourage producers to spend more to find and produce more gas, as well as encourage importers to bring more LNG.
ATF accounts for almost half of the cost of an airline and rates vary from state to state depending on local VAT.
A uniform GST would also boost the use of environmentally friendly natural gas, whose share in the energy basket that the government wants to increase to 15 percent by 2030 from the current 6.2 percent.
Pradhan has been making a case for the GST Council, the highest decision-making body of the new indirect tax regime, to make a decision in favor of these two fuels as soon as possible.
The Council is headed by the Minister of Finance of the Union and is composed of representatives from all states and territories of the Union.
According to the existing structure, both natural gas and ATF attract the special taxes of the Center and the value-added tax (VAT) of the state. Both these and all other liens will be included in GST if they are included in its scope.
The decision on their inclusion depends on the financial position of the states, since the income of these five petroleum products constitutes a substantial part of the state government's finances.
Except for a few, most states are incurring an income deficit since GST subsumed a dozen of its taxes, introducing the single tax, in an attempt to simplify the tax system and eliminate the cascading effect of the 'tax on taxes' in the country.
According to the industry, keeping ATF and natural gas out of the GST network was increasing the cost of these products, since a tax on inputs against the sale of these products is not credited, which ultimately increases the cost of production.
The aviation ministry has sought again and again the inclusion of ATF under GST as any increase in international oil rates is reflected in the prices of fuels for domestic aircraft, leading to more expensive air tickets. Natural gas is widely used as an industrial input by a variety of industries, from energy to steel, and its inclusion in GST would help eliminate the cascading impact of taxes, lowering the prices of CNG and piped natural gas. ANZ ANZ ANU ANU