Bihar Deputy Chief Minister Sushil Kumar Modi, who is also a member of the Goods and Services Tax Council, has said the council may consider bringing petroleum products under the new tax regime only if a monthly revenue target of Rs 1 lakh crore is met, IANS reported.
Modi told reporters on the sidelines of an event in Kolkata on Thursday that the new indirect tax structure would be complete only after petroleum products, stamp, and electricity duty are included.
However, the minister cautioned that this would not guarantee a reduction in prices of petroleum products as states would also be allowed to levy taxes over and above the GST rate “as these are considered as sin goods”.
Modi refused to provide a timeline for including petroleum product under the ambit of the Goods and Services Tax. “I do not see inclusion of these products in the tax regime in near future and it will take a longer time, but ultimately, stamp duty, electricity duty and petroleum products have to come in GST,” he added.
The minister warned that in the next three to four months there could be a “shortfall in revenue” as indirect tax rates on items are lowered. But he claimed that the revenue would increase in the long run because of greater compliance.
Ten states, including Bihar, Uttarakhand, Himachal Pradesh, and Jammu and Kashmir, are experiencing relatively high revenue shortfall, Modi pointed out. “I think southern and western states will come out of revenue shortfall soon,” he added.
The minister said that after three years no state would require any compensation because of the successful implementation of the tax regime.
In its last meeting, the council lowered tax rates on more than 50 items of daily use such as refrigerators, washing machines, and small televisions. These will now be taxed 18% instead of 28%. Modi said the council would try to remove more items, except a few sin and luxury goods, from the 28% slab. A new slab between 12% and 18% may be created depending on the stabilisation of revenue, he added.
The council will focus on issues faced by the Micro, Small, and Medium Enterprise sector in its meeting on Saturday as small manufacturers, traders and service providers have reported difficulties, Modi told reporters. “After this meeting, we expect life of MSMEs to become much simpler,” he added.