Why ATF will not come under GST anytime soon
What's the story
Aviation turbine fuel (ATF) is unlikely to come under the Goods and Services Tax (GST) regime anytime soon. This is mainly because states want to keep their power of taxing fuel products, a government source told CNBC-TV18. The source stressed that states' "right to tax" should be respected as fuel products are one of the few means left for them to generate revenue.
Tax regime
GST on fuel products could be considered in future
The source also hinted that GST on fuel products could be considered in the future.
However, this would only happen when the tax regime is more stable and less susceptible to geopolitical shocks.
The comments come amid ongoing discussions about GST rates and potential changes to the indirect tax system.
Expansion strategy
Government looking to expand GST tax base
The government is also looking to expand the GST tax base by increasing registrations.
It has proposed a new panel of GST officers that will act as a single expert body for the GST Council, replacing the current fitment and law committees.
The Fitment Committee looks into matters like GST rates, exemptions, and classification while the Law Committee handles legislation, rules, and interpretative issues related to GST.
Panel composition
States with fixed representation on new panel
Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, and Gujarat will have fixed representation on the new officers' panel.
Four other states, including Odisha, West Bengal, and Rajasthan, will get a rotational two-year term.
The states' representation on this panel will depend on their GST footprint such as revenue contribution and number of taxpayers.
Tax implications
Petroleum products outside GST framework
Notably, petroleum products are still outside the GST framework, which allows states to continue taxing them under the current system.
Bringing these products under GST would require a change in their tax treatment and could have implications for states' revenue arrangements.
This is a key consideration in the ongoing discussions about expanding the scope of GST to include fuel products.