GST Council to take up fuel inclusion as well as food delivery apps

A discussion to enact taxing of petroleum products including petrol, diesel, and aviation turbine fuel under the ambit of Goods and Services Tax (GST) is likely to take place in the 45th GST Council meeting which will take place on Friday. While this move is expected to bring in uniformity for taxing petroleum products, it would also entail a loss in the revenue share of taxes levied by the states and cesses by the Centre.

The Council in its meeting scheduled in Lucknow is likely to consider extending the time for duty relief on Covid essentials along with possibility of inclusion of food delivery apps like Swiggy and Zomato as restaurant services, sources said. The move for food apps is expected to shift the compliance burden to them instead of restaurants and will help in curbing tax evasion. It will discuss the modalities of continuation of compensation cess beyond June 2022.

In June, the Kerala High Court, based on a writ petition, had asked the GST Council to decide on bringing petrol and diesel within the ambit of the indirect tax regime. The decision to begin discussion on putting a timeline for enforcement of taxing petrol and diesel within GST has been taken in context of the court ruling, sources said.

At the time of the introduction of GST, the Constitutional amendment had included petroleum products under GST with the caveat of the Council recommending a date for its enforcement, whenever it’s applicable.

With near-record high petrol and diesel rates in the country, GST on petroleum products would end the cascading effect of tax-on-tax (state VAT being levied not only on cost of production but also excise duty charged by the Centre on such output). The jugglery of taxability of petroleum products under GST will be closely watched as bringing it under its ambit would imply Centre losing its share of revenue from cesses on such products. A majority of the Rs 32.80 per litre excise duty on petrol and Rs 31.80 on diesel is made of cesses, which is not shared with states.

Current Issue