New Delhi: Finance Minister Nirmala Sitharaman announced on Saturday that the central government intends to bring petrol and diesel under the GST framework, contingent upon the states agreeing on the tax rate.
Sitharaman emphasized that the groundwork for this inclusion was laid by former Finance Minister Arun Jaitley, who incorporated petrol and diesel into the GST law. The remaining step is for the states to convene, discuss, and agree on the applicable rate.
“The GST, as envisioned by former Finance Minister Arun Jaitley, aimed to include petrol and diesel. It is now up to the states to determine the rate. My predecessor’s intent was clear: we want petrol and diesel under GST,” Sitharaman stated.
When GST was launched on July 1, 2017, it unified over a dozen central and state levies, but five commodities—crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF)—were excluded from immediate GST taxation. The central government continued to levy excise duty, while states charged VAT, with periodic increases in these taxes, especially excise duty.
Sitharaman reiterated the central government’s original intent that petrol and diesel be included in GST eventually. “The provision exists for their inclusion. The next step is for states to reach a consensus in the GST Council and decide on the tax rate. Once the states agree, the rate will be formalized into the Act,” she explained after the 53rd GST Council meeting.
Bringing oil products under GST will enable companies to offset the tax paid on inputs and will standardize fuel taxation across the country.
