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Arun Jaitley: Finance Minister Arun Jaitley Asks States To cut Tax Burden On Petro Products

semi-tubular reactorNEW DELHI: Finance Minister Arun Jaitley has urged state chief ministers to reduce gross sales tax or worth-added tax (VAT) on fuels which were saved out of the purview of products and services tax (GST) however are used as input for merchandise that come underneath the new indirect tax regime.

Crude oil, petrol, diesel, pure fuel and aviation turbine gasoline (ATF) have been saved out of the purview of GST, which kicked in from July, replacing over a dozen central and state levies like central excise, service tax and VAT with a single uniform levy. States have turned down the Centre’s mudanjiang petroleum machinery zone request to bring natural gas within the ambit of GST.

A proposal to this effect was part of the GST Council’s agenda for its last assembly.
“The letter by finance minister highlights a concern being raised by the manufacturing sector in the nation concerning the rise in input costs of petroleum products happening on account of transition to the GST regime,” an official assertion stated on Friday.

Inputs akin to natural gasoline are used for power era in addition to in manufacturing fertilisers, petrochemicals and a wide range of products together with glass.

Crude oil is used to make petrol and diesel as also kerosene, LPG and industrial fuels including naptha, fuel oil and bitumen.

While other industries can declare enter tax credit or set off tax paid on inputs with that paid on the final product, these industries can mudanjiang petroleum machinery zone not do so as crude oil, three petroleum merchandise and pure gasoline are out of GST’s ambit. This raises price for the industries using either of the five merchandise as inputs.

Jaitley has written to state chief ministers “urging them to reduce burden of VAT on petroleum products used as inputs in making of goods after the introduction of GST”, according to the statement.

“In the pre-GST regime, as a result of petroleum products in addition to the final items produced both attracted VAT, input tax credit score of petroleum merchandise being used as inputs by manufacturers was allowed to varying extent by different states.

“Nevertheless, in the publish-GST scenario, manufactured goods attract GST whereas the inputs of petroleum merchandise used in the manufacturing appeal to VAT and, due to this fact, it could lead to cascading mudanjiang petroleum machinery zone of taxes,” it stated.

Some states had lowered VAT to 5% on compressed natural fuel (CNG) used for manufacturing Petroleum Production Display of products. Some others had lower VAT on diesel.

VAT on diesel ranges from 17.4% in Delhi to 31.06% in Andhra Pradesh. On natural gasoline, it varies from nil to 15%.

Natural gasoline options akin to naphtha, fuel oil and LPG are already included in the GST checklist. Whereas LPG can be taxed at 5%, naphtha and gas oil shall be taxed at 18%.