Karnataka is expected to oppose the proposal to bring petrol and diesel within the ambit of goods and services tax (GST), arguing that such a move will lead to substantial revenue loss for states. It will share its opinion at the forthcoming GST Council meeting.
The council comprises representatives of all states and decides on policy and indirect tax rates.
“If automotive fuels are included in the GST regime, the immediate impact will be massive revenue loss for both the Centre and states. Karnataka cannot afford to take such a hit. We are bound to oppose the proposal,” said an official of the finance department. “Even seeking compensation is not advisable as the Centre will not be able to meet such demand. The best thing we can do is to maintain the status quo and wait for crude oil prices to come down. The declining trend has already started.”
Currently, both state and central governments impose taxes on fuel. High retail prices have prompted discussions about whether including petrol and diesel in the GST structure can make them more affordable. The highest GST rate is 28 per cent, much lower than the applicable rates of state and central taxes on fuel. Union finance minister Nirmala Sitharaman said on Tuesday that she would be glad to discuss the suggestion. On Wednesday, MP Sushil Kumar Modi told Parliament that it was impossible to make the change in the next eight to 10 years.