Govt not in favour of including fuel prices under GST, avoid unscientific actions of Centre, says Kerala

THIRUVANANTHAPURAM: Finance Minister K N Balagopal said Kerala will oppose the inclusion of petroleum products in GST if it is presented at the GST Council meet tomorrow. This move will have a huge impact on the state’s economy. The state’s stand is to control the rise in petrol and diesel prices. However, the unscientific tax measures of the Centre leading to inflation should be avoided. The additional tax levied by the central government on petroleum products is not shared with the states. The state’s tax revenue declined significantly since the advent of GST. Ways to meet the financial needs of the state are being blocked. In this case, the inclusion of petroleum products in the GST cannot be agreed.

If the fuel price is included in GST, the maximum tax will be 28 per cent of the base price of petrol of Rs 39. In that case, Kerala will get only half of Rs 10.92. That is, the state will get Rs 5.46. Presently the tax on a litre of petrol is Rs 24.

The compensation package provided by the Centre to address the revenue shortfall of states’ due to the implementation of GST will end in June 2022. The state wants it to continue for another five years. The state may raise it in tomorrow's meeting.

This is the first time the GST Council is being convened directly after the outbreak of Covid. Prior to this, online meetings were held. The meeting is scheduled to convene in Lucknow tomorrow. In addition to the inclusion of GST in petroleum products, extending tax exemption for essential medicines till December is also in the agenda. The Assam government has requested to collect flood cess similar to Kerala model and to bring a unified web portal system for GST in tomorrow's meeting.

The move is to bring petrol, diesel, cooking gas and aviation fuel under GST. Despite strong opposition from states including Kerala, various states are worried about the declining tax revenue. It is not clear whether the council will make an immediate decision. Meantime, the high court directed that a decision be taken on the matter of implementing GST. Following this, the central government decided to bring the issue on the agenda of the council.