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Maharashtra opposes proposal to bring fuel prices under GST ambit
The Maharashtra government has opposed the proposal to bring petrol and diesel in the ambit of the goods and services tax (GST). The GST Council in its meeting on Friday discussed the proposal in order to bring down fuel prices.
The Maharashtra government has opposed the proposal to bring petrol and diesel in the ambit of the goods and services tax (GST). The GST Council in its meeting on Friday discussed the proposal in order to bring down fuel prices.
Opposing the move, deputy chief minister Ajit Pawar, who also handles the finance portfolio, said that the existing tax system should not be changed to maintain financial autonomy of the states that are already in financial trouble owing to the Covid-19 pandemic. He demanded that the Centre reduce its taxes imposed on fuel, which will help in providing relief to the citizens from inflation and price hikes.
Pawar was speaking to the media in Pune as he could not attend the GST Council meeting held in Lucknow. His request that he be permitted to attend the meeting online was not accepted.
“I have made it clear before the GST Council in writing that VAT (value added tax) should be continued as part of the existing tax regime on petrol and diesel prices and they should not be brought in the ambit of GST. VAT imposed on fuel plays a major contribution for the funds required for development works,” Pawar said.
“Before GST was implemented, the local bodies used to earn revenue from octroi. It was replaced by LBT (local body tax) and later, VAT and sales tax were introduced, replacing LBT. Ever since GST was introduced, most of the things (over collection of taxes) have started going under the jurisdiction of the Central government. Our view is very clear, the powers of the Centre to collect taxes should remain with them as the entire country runs on this tax system including defence. But the Centre is also gradually encroaching upon the power of the states to impose taxes,” he remarked.
“After GST was imposed, additional revenue sources of the states have become limited, which has automatically impacted the development works. The states should get autonomy to explore revenue sources, which is important and necessary as well,” he pointed out.
The finance minister said states also need funds for development works, which was badly impacted owing to Covid-19.
“All are facing financial trouble due to Covid-19 pandemic; people are struggling with inflation and hikes in fuel prices, and the Maharashtra government is also worried about it. We demand that the Centre reduce its taxes on fuel prices. If that happens, people will get relief from inflation,” Pawar said.
Pawar said that the Centre gets ₹32.90 per litre on petrol and ₹31.80 per litre on diesel through various taxes. During the Covid period, it has got a revenue of ₹44,000 crore alone from Maharashtra in the form of taxes on fuel.
The deputy CM further said they cannot approach the Centre all the time for funds. In addition, they are also providing their contribution from the state’s budget for the welfare schemes jointly run by the Centre and the state government.
He reminded that the promises made to the states while bringing the GST must be fulfilled in letter and spirit by the Centre.
“The states were promised reimbursement against revenue losses for five years between July 2017 and June 2022. It was further said that the period will be extended for another five years with 14% annual rise. Our two years were wasted in Covid-19 and thus, we requested the GST Council to continue the reimbursement for another five years,” Pawar said.
State Bharatiya Janata Party (BJP) unit has announced to hold an agitation against the Maharashtra Vikas Aghadi (MVA) government for opposing the proposal to bring fuel under the ambit of GST. Former CM Devendra Fadnavis said, “This issue has brought the real face of Congress and Nationalist Congress Party (NCP) before people. They are the one who were holding agitations over hike in fuel prices and now when the Central government is trying to reduce them by ₹25- ₹30 per litre by bringing fuel under GST, they are opposing the move. If MVA choses to oppose the proposal, then we will agitate against MVA government,” Fadnavis told reporters.
