Including oil and gas under the Goods and Services Tax (GST) regime is a topic of ongoing discussion. As an end consumer, you must understand what it means if Oil and Gas be included in GST. We look at both sides of the story and what would be the potential outcome.
Why should Oil & Gas be included?
Here are some of the reasons for inclusion:
- Reduced Cascading Effect: Currently, oil and gas attract central excise duty, state VAT, and additional levies. Bringing them under GST would eliminate these cascading taxes, potentially leading to lower retail prices for consumers.
- Uniformity and Transparency: Inclusion in GST would ensure a single, nationwide tax structure for oil and gas. It could improve transparency and ease of doing business for companies in the sector.
- Increased Revenue: The government hopes that a streamlined tax system might lead to better tax collection and potentially higher revenue.
Why is Oil & Gas not included in GST?
Here are some arguments for not including it in the GST:
- Impact on Inflation: Since GST is a destination-based tax (taxed at the point of consumption), including oil and gas could lead to an initial rise in retail prices, potentially fueling inflation.
- Revenue Concerns: Some states currently earn significant revenue from taxes on oil and gas. They might be apprehensive about losing this revenue stream if these products are brought under GST.
- Political Resistance: Oil and gas are politically sensitive commodities. Any significant price increase due to GST could lead to public backlash.
What are the possible implications?
- Impact on Consumers: The ultimate impact on consumers depends on the final tax rate and any potential efficiency gains from the GST system. The prices could go down in the long run due to a streamlined tax structure.
- Boost for Industries: Lower input costs for oil and gas could benefit industries that rely on these products as inputs, potentially leading to increased production and job creation.
- Fiscal Management: The success of including oil and gas under GST would hinge on effective fiscal management by both the central and state governments.
Let us know your thoughts on the same, about this interesting topic. To read more such latest news, Follow: Jarvis Invest.
