Need to consider subjecting fuel to GST: CBIC chief | Goa News
Panaji: The Union government has estimated monthly GST collection at more than Rs 1.2 lakh crore, Central Board of Excise and Customs (CBIC) Chairman Vivek Johri said on Saturday. He added that it was necessary for the GST board to deliberate to bring petroleum products under GST.
“The main concern for states in the past is the negative impact on their revenues,” he told TOI. “All states levy VAT on the sale of petroleum products, which are not subject to GST. This apprehension was strong in the initial phases of GST as the revenue stream that people expected from GST did not materialize and then the picture got complicated due to Covid.
He said there were fears it would impact state revenues. “They didn’t want to lose their independence either,” he said.
“But as GST revenue collection improves, I think it’s only natural that states’ positions will soften on the inclusion of petroleum products in the GST. The benefits to the industry and the overall logistics and transportation sector is quite obvious because if you subject petroleum products to GST, there will be free flow of ICT within that value chain, so it’s a very positive impact that this will have on the oil industry If there is an opportunity to reduce costs due to ITC’s availability of tax paid on goods and services consumed by the oil industry, this will naturally benefit the whole savings in terms of cost reduction.
He said that in terms of the apprehension of lost revenue, if you look around the world, what most countries do is in addition to the GST they levy some sort of of tax which can be either excise duty, VAT or perhaps sales tax, on the sale of petroleum products.
“With growing awareness of the environment, people are now looking at them as carbon taxes as well,” Johri said. “It is possible to offset the perceived loss of revenue by properly calibrating the excise duty or sales tax or any other form of tax you levy on petroleum products in addition to the GST. I don’t think there’s a specific timeline, because the constitutional mandate itself says the council must make a recommendation. This issue will require much discussion within the TSG Council and a decision will be made by consensus.
Responding to the question whether monthly GST collections will see a decline as the economy slows down, he expressed his confidence that it will definitely stay above the Rs 1 lakh crore mark.
“In fact, we are now looking at a much higher monthly average, which could be in the range of Rs 1.25-1.3 lakh crore, mainly for two reasons, one is the revival of the economy. You would have noticed that Goa is such a big hub for the tourism industry for travel, and the service sector has also rebounded post Covid.There is good economic activity in some of the sectors which have been hit hard by Covid. This is a very positive development, which will contribute to better revenue collection.
The senior IRS official also said he would await the report from the group of ministers on the collection of the 28% GST on gambling and betting, after which the GST board will make an appropriate decision.
“The GoM deliberated on two issues relating to the gambling industry, casinos, lotteries, etc. – the issue of the rate and what value the rate should be charged at,” he said. “We have not yet received the recommendation from the GoM. Especially with regard to casinos, the request is that it is only charged on the value of the token minus the winning fee, which is the margin that casinos make in their business. Currently, the provision is that it should be charged on the full value of the token, which is the point of contention.
Asked about the revenue the Center and the State would earn from the GST on gambling and casinos, he said, “In Goa alone, the collection would be around Rs 1,000 to 1,500 crore per year, which is quite a significant portion of Goa’s income. The government wins. But online gambling is another very big industry, and lottery revenues are likely to be quite substantial. Currently, the rate is 28%.
“The main concern for states in the past is the negative impact on their revenues,” he told TOI. “All states levy VAT on the sale of petroleum products, which are not subject to GST. This apprehension was strong in the initial phases of GST as the revenue stream that people expected from GST did not materialize and then the picture got complicated due to Covid.
He said there were fears it would impact state revenues. “They didn’t want to lose their independence either,” he said.
“But as GST revenue collection improves, I think it’s only natural that states’ positions will soften on the inclusion of petroleum products in the GST. The benefits to the industry and the overall logistics and transportation sector is quite obvious because if you subject petroleum products to GST, there will be free flow of ICT within that value chain, so it’s a very positive impact that this will have on the oil industry If there is an opportunity to reduce costs due to ITC’s availability of tax paid on goods and services consumed by the oil industry, this will naturally benefit the whole savings in terms of cost reduction.
He said that in terms of the apprehension of lost revenue, if you look around the world, what most countries do is in addition to the GST they levy some sort of of tax which can be either excise duty, VAT or perhaps sales tax, on the sale of petroleum products.
“With growing awareness of the environment, people are now looking at them as carbon taxes as well,” Johri said. “It is possible to offset the perceived loss of revenue by properly calibrating the excise duty or sales tax or any other form of tax you levy on petroleum products in addition to the GST. I don’t think there’s a specific timeline, because the constitutional mandate itself says the council must make a recommendation. This issue will require much discussion within the TSG Council and a decision will be made by consensus.
Responding to the question whether monthly GST collections will see a decline as the economy slows down, he expressed his confidence that it will definitely stay above the Rs 1 lakh crore mark.
“In fact, we are now looking at a much higher monthly average, which could be in the range of Rs 1.25-1.3 lakh crore, mainly for two reasons, one is the revival of the economy. You would have noticed that Goa is such a big hub for the tourism industry for travel, and the service sector has also rebounded post Covid.There is good economic activity in some of the sectors which have been hit hard by Covid. This is a very positive development, which will contribute to better revenue collection.
The senior IRS official also said he would await the report from the group of ministers on the collection of the 28% GST on gambling and betting, after which the GST board will make an appropriate decision.
“The GoM deliberated on two issues relating to the gambling industry, casinos, lotteries, etc. – the issue of the rate and what value the rate should be charged at,” he said. “We have not yet received the recommendation from the GoM. Especially with regard to casinos, the request is that it is only charged on the value of the token minus the winning fee, which is the margin that casinos make in their business. Currently, the provision is that it should be charged on the full value of the token, which is the point of contention.
Asked about the revenue the Center and the State would earn from the GST on gambling and casinos, he said, “In Goa alone, the collection would be around Rs 1,000 to 1,500 crore per year, which is quite a significant portion of Goa’s income. The government wins. But online gambling is another very big industry, and lottery revenues are likely to be quite substantial. Currently, the rate is 28%.