This topic has been always a subject of dispute even before introduction of GST. Various theories are forthcoming from the tax professionals, trade and industry. Especially, after sudden surge in the prices of Petrol and Diesel, the need of bringing petroleum products under GST net has arisen.

As petroleum products are not under GST net, the industry is burdened with the additional cost of local taxes levied on such products without Input Tax Credit. Eventually, the burden is being shifted to the end consumers of goods and services. At present petrol, diesel, crude petroleum, aviation turbine fuel (ATF) and natural gas are not covered within the ambit of GST.

There are various aspects the GST Council must consider before even thinking about introducing GST on the petroleum products. First, the States will raise an objection for the change as they will lose huge revenue. Second, the compensation mechanism from Centre to State will be a big hurdle to go forward. Third, the rate of GST on the petroleum products is another anticipated challenge before the Council.

Definitely, inclusion of petroleum products under GST would have positive impact but, not to the expected extent. Since, petroleum product’s retail prices would remain unchanged, the inflationary impact would be the same. Apart, even for Govt. also to incorporate petroleum products under GST, is a time consuming affair and then, the trade and industry will take its own time to pass on GST on the end consumer through product/ services prices as the industry is facing delay in getting Input Tax Credit and GST Refunds. So, it seems from the end consumer perspective that it will not solve the problem.