Petroleum is a part of GST, but will apply after states agree: Arun Jaitley

Till then, petroleum products would continue to be taxed as per the current taxation regime

Petroleum products, which will be within the purview of the Goods and Services Tax (GST) slated to be implemented from July 1, would, however, continue to be taxed as per the current taxation regime until the GST Council agrees on applying GST to these products, Finance Minister Arun Jaitley said on Thursday.

"Petroleum is part of GST. However, GST will apply on petroleum only after all the states, through the GST Council, is agreed on it... and till then states will continue to tax petroleum products," Jaitley said in the Rajya Sabha during a discussion on the budget.

He said GST is a "political package" that had been drawn up after discussions between the Centre and the states.

"Petroleum, alcohol and the issue of land have been repeatedly raised and long discussions held on their inclusion in GST," Jaitley said.

On alcohol, the Finance Minister said the liquor industry contributes substantially to states' revenues, with many of them relying heavily on it.

Under the existing regime, the taxation of petroleum products and liquor is shared between the Centre and states

Their inclusion has been a matter of lengthy debate between the Centre and states, as the latter feared a loss of autonomy in taxing these products and an erosion of revenue base under the GST's standardised rate model.

"As regards land, the Delhi government, for instance, wants that it be included in GST. The GST Council has decided to let the implementation of GST begin (July 1) and then take up the land issue during the first year," Jaitley said.

The GST Council, headed by Jaitley, has held 12 meetings here so far and has also approved all the enabling draft bills for enacting the GST law.