To provide relief to consumers from rising prices of petrol and diesel, state finance ministers from Congress-ruled states will push for inclusion of petroleum products and real estate under the Goods and Services Tax (GST) ambit in the Council meeting to be held on 18 January at 12 noon.

Petrol and diesel prices are skyrocketing. The Modi government is profiteering at the expense of common man, Punjab finance minister Manpreet Badal said.

GST, he added, was projected to usher growth, but its flawed implementation had resulted in GDP falling as well as an economic mess and retail inflation climbing to a 15-month high.

Most states and the Centre are of the view that their revenues may fall if petroleum products and real estate are included under the GST ambit. By bringing in petroleum products under the GST regime, experts believe that fuel prices could come down by 30-40 per cent even at the highest slab of 28 per cent.

As regards the demand for including real estate in the GST ambit, currently, taxation of land and buildings is part of the state list in the Seventh Schedule of the Constitution. Allowing the Centre to levy tax on land and buildings would need an amendment in GST laws.

Badal raised concerns about the government’s move to make several changes in the GST law itself. He said: “The agenda paper is 350 pages long and today only we have received 80 more pages. To me the future scenario sounds scary. I shudder to think of the extent of litigation that will arise due to ill-conceived provisions that have been unleashed in a hurry.

“The changes now proposed are also being rushed without wider consultation with all stakeholders. I understand that most of the recommendations of the committee set up to suggest reforms have been overruled.”

Last month, Union finance minister Arun Jaitley told the Rajya Sabha that the Centre was ready to bring petroleum products under GST but it would want a consensus with the states before taking such a step.
Days after Jaitley’s statement, industry body Assocham said the consensus with states on inclusion of petroleum would never emerge as they and the Centre were over-dependent on the sector for revenue collection.

However, tax revenues fell sharply to Rs 80,808 crore in December from Rs 94,063 crore in August ~ the first month of tax collections. This has raised the risk of the Union government breaching its 3.2 per cent of GDP fiscal deficit target this fiscal year.

Badal said: “The government is sitting over a pile of export refunds which total close to Rs 75,000 crore. Once these are sanctioned the impact on revenues will be colossal which will shake the fragile confidence in the stability of the economy drastically.”

The Council has already decided for the early roll-out of the e-way Bill system after detecting instances of widespread tax evasion.

With the implementation date of the e-way Bill approaching, industry is worried about harassment by tax officials and disruption of free movement of goods within the country. Badal also said the government should first hold wider consultations before rolling out e-way Bill.

“We are not against the introduction of e-way Bill, but it should not be introduced without adequate preparedness,” Badal said.
The GST Council is likely to rationalise the tax rates of about 70-80 items. The government’s attempt is to zero-in on the highest 28 per cent slab and then move towards rationalisation of overall rates.