Necessary to consider bringing fuel within the GST regime: CBIC Chairman

According to Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs (CBIC), the Union government estimates monthly GST collection at above Rs.1.2 lakh crore. He went on to say that the GST council should consider bringing petroleum goods within the GST ambit.

“In the past, the biggest issue that states have had was the negative impact on their revenue,” he explained. “On sales of petroleum goods that are not subject to GST, all states levy VAT.” This fear was high during the early stages of GST because the money stream that individuals expected from GST did not materialise, and then the situation became confusing due to Covid.

There was concern, he said, that it would have an impact on state revenue. “They, too, did not want to lose their freedom,” he explained.

“However, I believe it is natural that as GST revenue collection improves, state attitudes on the inclusion of petroleum items in GST will soften. The benefits to business and the wider logistics and transportation sector are clear, because bringing petroleum products under GST allows for free ITC flow across the value chain. As a result, it will have a highly good impact on the petroleum business. If there is a chance of cost reduction due to the availability of ITC on taxes paid on goods and services consumed by the petroleum industry, it will naturally benefit the broader economy in terms of lower costs.”

He explained that, in response to concerns about revenue loss, most governments collect some type of tax on the sale of petroleum goods in addition to the GST, which could be an excise fee, VAT, or sales tax.

“With increased environmental awareness, people are increasingly seeing them as carbon taxes as well,” Johri said. “You can make up for the perceived income loss by properly calibrating the excise duty, sale tax, or any other type of tax you collect on petroleum items in addition to the GST. I don’t believe there is a time limit because the constitutional mandate requires the council to make a proposal. This subject will be debated extensively in the GST council, with a conclusion reached by consensus.”

When asked if monthly GST receipts will fall as the economy slows, he expressed confidence that they will remain over the Rs.1 lakh crore threshold.

“In fact, we are now looking at a substantially higher monthly average, possibly in the range of Rs.1.25-1.3 lakh crore, owing to two factors. The first is the economic recovery. You may have noted that Goa is a major travel destination, and that the services sector has recovered since Covid. Some of the industries that were harmed by Covid are seeing increased economic activity. This is a very beneficial development that will help us collect more income.”

The top IRS official also stated that they would wait for the report from the group of ministers on imposing a 28 percent GST on gaming and betting before making a decision.

“The GoM has discussed on two topics connected to the gaming business, such as casinos and lotteries,” he added. “The rate issue, and at what value the rate should be levied. We have not yet received the GoM’s recommendation. The demand, particularly with regard to casinos, is that it should be levied only on the token value minus winning charges, which is the casino’s profit margin. The clause now states that it should be levied on the full value of the token, which is a source of controversy.”

In Goa alone, the collection will be around Rs.1,000-1,500 crore a year, which is quite a big chunk of the money the Goa Government collects, he said when questioned about the revenue the Centre and state would make through GST on gambling and casinos. However, online gambling is a hugely profitable sector, and lottery revenue is likely to be significant. The current rate is 28 percent.

Source: Times of India