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Time right to put oil under GST: SBI’s Soumya Kanti Ghosh

Updated : March 05, 2021 03:22:56 IST

There has been an increasing buzz around including petrol and diesel into the GST regime. Finance Minister Nirmala Sitharaman on February 22 had said that Centre and States should sit together and see how best to handle this.

“Taking into GST can be an option. That will certainly bring it to one rate all over the country. The GST council can deliberate and take a position on it,” she said.

She also said that the provision for the petroleum products is already made in the GST and it will not require much more legislative exercise.

Oil Minister Dharmendra Pradhan too on February 23 said that he has been urging the GST Council to bring petroleum under GST purview.

RBI MPC Minutes also stated the need for proactive supply side measures and coordinated action by Centre and States to contain the high indirect taxes on petrol and diesel.

Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India in a report has quantified what could the numbers look like if petrol and diesel were bought under the GST regime.

Speaking to CNBC-TV18, Ghosh said that the issue of oil getting under GST has been there for a while for both Centre and State, but both have a problem of fiscal uncertainty.

Ghosh said that the price and tax mechanism of oil is the same across the globe, but India has 30 different tax structures across states.

“The taxes on oil, it is different across 30 states in India. It is different for the Centre and even in a state like Maharashtra we have two taxation structures – one for Mumbai and one for Navi Mumbai. So, in effect, we have around 31 tax structures for oil in the country,” he said.

He said that India needs towards price regime for oil and believes that it is the right time to push oil under GST.

“Given that right now everybody is talking about growth as the first priority and fiscal consolidation or fiscal austerity for that matter may have been pushed into background for the next 3-4 years, I think right now the time is just may be right to push oil under GST,” he said.

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