Petroleum products like petrol and diesel will come under the ambit of Goods and Services Tax (GST) once the states agree, Union Finance Minister Nirmala Sitharaman said on Wednesday.
“Once the states agree, we will have the petroleum products also covered by GST,” Sitharaman said while speaking at a post-budget session organised by PHD Chamber of Commerce and Industry.
Bringing petroleum products under GST is a long-standing demand from the industry. Analysts argue that it will help in controlling inflation and boosting industrial growth.
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Most goods and services in India are covered under the ambit of GST, which was rolled out on 1 July 2017. However, petroleum products like petrol, diesel, ATF and natural gas are outside the ambit of GST. They still attract the legacy taxes like VAT, Central Sales Tax and Central Excise Duty.
Sitharaman said the Union government is ready to bring petroleum products under the ambit of GST but the decision would have to be taken by the GST Council.
“It is not so much of us (the central government) not wanting it, it is the entire GST Council saying yes. They have to determine a rate and then we get it into the GST,” the finance minister said.
Later speaking at an interactive meeting organised by the industry body Assocham, Sitharaman said global uncertainties pose a huge challenge to the Indian economy, especially the export sector.
She noted that India has experience of handling uncertainties arising out of domestic issues like Monsoon and unfavourable weather conditions. However, the ongoing global challenges arising out of the disruptions caused by the Covid pandemic and the Russia-Ukraine war are far more complicated.
“The changes abroad, recession abroad, slowing economy abroad are all going to be the challenge for the Indian exporters,” she said.
The finance minister said in the union budget 2023-24 changes in customs duty were announced keeping in view the interests of Indian exporters and MSMEs.
“There is a very keen eye being kept for what is happening at our borders in terms of exports and in terms of imports. We are looking at specific items to see which are going to be continuously needed for the next few years and which are going to hurt us,” she said.
Alluding to the widening trade deficit due to surge in imports, the finance minister said, “We can’t really be inward looking saying Atmanirbhar and therefore I don’t allow you to import. There are several MSMEs and also large manufacturers who still need those critical components to come from somewhere else.”
India’s trade deficit widened to $232.95 billion in the first 10 months of the current financial year as against $153.79 billion recorded in April-January 2021-22.