Petroleum products out of GST purview
Chief Economic Advisor Arvind Subramanian has said that all petroleum products will be left out of the purview of the GST bill for now. Therefore, petrol and other petroleum products would continue to be taxed by the Centre as well as states. He said that the GST council would decide till how much longer these products would be out of the new taxation regime.
The GST Bill was first discussed by the Vajpayee Government in 2000. It aimed to replace all the indirect taxes levied on goods and services by the Central and State Governments with one single tax.
The UPA first introduced the GST in the Lok Sabha in 2011. The BJP was opposed to the bill then, claiming that no consensus was reached on its implementation. The bill was stalled due to the absence of consensus over compensation of the loss of revenue incurred by states. It was re-introduced in the Lok Sabha after the BJP came to power in 2014.
The GST bill was passed with two-third majority in the Lok Sabha. The Congress did not oppose the bill, and staged a walk-out. The bill now has to be passed with two-third majority in the Rajya Sabha and has to be ratified by atleast half the states for it to become a law. BJP does not have the required majority in the Rajya Sabha.
The BJP's electoral loss in Bihar prompted PM Modi to initiate talks with Sonia Gandhi over the GST's implementation BJP now does not have the requisite majority in Rajya Sabha to pass the bill. The Congress stated that despite having talks, their stance remains unchanged and that they would not allow passage of the bill in the Rajya Sabha without a Parliamentary Committee review.
The Congress is the principal opponent to the GST bill. All other parties including the Trinamool Congress, the Janata Dal (U) and the Samajwadi Party favour the proposed bill.
Chief Economic Advisor Arvind Subramanian has proposed a 40% "sin-demerit" GST for luxury goods. This will apply to luxury cars, aerated beverages, paan masala, tobacco and tobacco products and will significantly increase the costs of these goods. Soft drink manufacturers are alarmed at the proposal, deeming it unfair to club aerated beverages with the likes of tobacco products.
The government has proposed GST rates at 17-18%, triggering hopes of achieving a consensus on the bill. The Congress has been the principal opponent to the bill, citing three demands: dropping the 1% additional tax, 18% GST rate and formulation of dispute resolution mechanism. Arun Jaitley stated that BJP was willing to negotiate with the Congress to ensure speedy implementation of the GST bill.