Goods and Services Tax (GST) Council will consider taxing petroleum products under a single national rate, according to people familiar with the matter, opening the door for a potential major change in consumer prices and government revenue.
The panel, headed by Finance Minister Nirmala Sitharaman, will examine the proposal at its meeting Friday after an Indian court asked for the matter to be taken up, the people said, requesting not to be identified as the agenda of the meeting isn’t public.
A spokesperson for the finance ministry didn’t immediately respond to calls for comment.
Any change to the GST system would require an approval by three-fourths of the panel, which includes representatives from all states and territories -- some of which have resisted incorporating fuels into the system as they would be handing over a key revenue-raising tool to the central government.
The move to a uniform levy for fuel, discussions of which were reported earlier by CNBC-TV18, would help soften gasoline and diesel prices, which have been testing records in recent months mainly due to taxes imposed by the federal and state governments.
Levies make up more than half of fuel costs in the country, a sore point for the inflation-targeting Reserve Bank of India as it seeks to keep borrowing costs low to support economic recovery from the pandemic. Diesel and gasoline make up more than half of the country’s fuel consumption.
At its meeting Friday, the GST panel also plans to consider extending concessions on some drugs used in Covid-19 treatment for another three months until Dec. 31, the people said. The government will also likely present options on compensating states for their GST losses beyond next year, they added.
The panel would also probably look at increasing GST to 12% on some renewable equipments and to 18% on iron, copper and other metal ores and concentrates, CNBC-TV18 reported.