GST on petroleum: Jaitley throws the ball to Congress-ruled states

Jaitley had said that the Centre wanted to bring petroleum under the ambit of GST and was awaiting responses from states

Finance minister Arun Jaitley asked the Congress party to tell the five states ruled by it to agree to impose the goods and services tax (GST) on petroleum, instead of asking what the Centre was doing on this . “You tell the five states to give a statement that they are ready to do so,” he told the Congress benches while giving a reply in the Lok Sabha to the second supplementary demand for grants. Involving net cash outgo of Rs 33,380 crore, it was later passed by the House. 

He reminded the opposition party that the constitution amendment Bill drafted by the previous government it had headed did not include petroleum under GST. It was the subsequent Bill under the BJP-led NDA government that did so at zero rate, he said. 

“You (the Congress) are in the opposition and have the flexibility to change your position,” he said. 

Jaitley had said on Tuesday that the Centre wanted to bring petroleum under the ambit of GST and was awaiting responses from states. On why the Centre has not cut the excise duty on petroleum further, he said the government did so when crude oil prices went up. “We asked states to reduce taxes on petroleum. All NDA-ruled states did so but the UPA-ruled states refused to,” he said. 

He said the excise duty on petroleum was used to fund higher allocation to infrastructure, including highways. “Who will pay for highways, if not those driving vehicles?” he asked. 

The finance minister wondered why some states were saying their revenues under GST had gone down, when they were assured constitutionally of protection regarding 14 per cent growth in their tax receipts on the base of 2015-16. Taking on Congress president Rahul Gandhi for calling GST a ‘Gabbar Singh Tax’ (the reference is to a dacoit) he said the total incidence of earlier taxes came to 31-31.5 percent, if cascading was also considered. The peak rate of GST is 28 per cent,  reduced to 18 per cent on most items. 

Fiscal deficit

Jaitley reiterated the aim of reining in the Centre’s fiscal deficit at 3.2 per cent of the country’s gross domestic product (GDP) for the current financial year, ending March 31. The deficit had reached 96 per cent of the Budget Estimate for the full year in the first seven months, primarily because of expenditure frontloading. 

“The idea is that the glide path of the fiscal deficit should always be maintained, so that our borrowing keeps coming down,” he said. He said the country’s economy was growing at an annual seven to eight per cent, a new normal, and inflation was under control.

On the contentious Financial Resolution and Depositors Insurance Bill, he assured that the money of all depositors in public sector banks would be protected. “We need not create any fear of psychosis. When the Bill comes before the joint committee, please discuss this. There is a 2011 G-20 commitment, when the UPA was in power (that led to the legislation), an offtake of the 2008 global crisis,” he said.