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MOSL: ECOSCOPE-Government collected INR5.2t from petroleum sector in FY17

​ECOSCOPE: Government collected INR5.2t from petroleum sector in FY17; Petroleum products unlikely to be included under GST even at a later stage

It is generally argued that the states appealed to keep key petroleum products out of the GST ambit, citing them as their main source of income. However, the center’s dependence on petroleum products is just as high. Also, it is the central government that has played with prices in recent years.

In FY17, the central government collected INR3.35t from the petroleum sector, amounting to 16% of gross receipts, while the state governments received INR1.89t – 16% of their own receipts. Further, the central tax on diesel and petrol (per liter) increased 4x and 2x, respectively over the past three years. State taxes, on the other hand, increased by just ~20%, even lower than the increase in dealer commissions.

Considering consumers’ welfare, bringing retail fuel products under GST would be favorable, as they are probably the highest taxed items. However, the inclusion of excluded petroleum products under GST would have hurt the center more than the states. Who would then push to include excluded petroleum products under GST at a later stage?