The Biodiesel Association of India (BDAI) has sought a revision in Goods and Services Tax (GST) of 18 per cent levied on biodiesel to 5 per cent saying higher taxation will have an adverse impact on the industry.
BDAI has written letters to the Union finance minister Arun Jaitley and finance ministers of West Bengal and Rajasthan seeking their support for reducing the GST from 18 per cent to 5 per cent.
The apex biodiesel industry body in its letter has mentioned that in the pre-GST regime, only six per cent excise duty was levied on biodiesel and no VAT was imposed on it mainly to promote the use of the clean fuel.
"States like West Bengal, Uttar Pradesh, Uttarakhand, Rajasthan, Haryana and Chhattisgarh were levying only the excise duty. But with the implementation of GST, the statutory levy on biodiesel has gone up to 18 per cent which has made it costlier than high speed diesel," BDAI said in its letters.
Currently, biodiesel is used by oil marketing companies (IOCL, HPCL, BPCL), Indian Railways, state transport corporations, and port authorities, among others. The industry is also in discussions with the army, navy and air force for using the green fuel.
"Indian Railways was able to start blending across 15 zones, but stopped it due to increased burden of GST. The state road transport corporations of Karnataka, Andhra Pradesh, Telangana have created blending infrastructure but have not been able to absorb the increase in GST resulting in complete stoppage of the blending programme," BDAI said.
It further pointed out that several biodiesel retail outlets established in the states of Maharashtra, Rajasthan, Uttar Pradesh have become non-functional due to increased biodiesel price.
This may cause a major setback by way of thousands of jobs losses, BDAI said.
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