Petroleum is a rich taxation source for the central and the state governments and it is unlikely to be brought under the Goods and Services Tax (GST) any time soon.

That’s also the view of the Vice Chairman of Niti Aayog, Rajiv Kumar. Several senior ministers have demanded that petroleum products – basically petrol and diesel be brought under the the new taxation regime.

But says Kumar: “It (oil) can’t be brought under GST. That’s because the total state and central taxes on petrol put together are around 90 per cent right now.”

He told IANS in an interview here: “I can’t see how any state will take a cut so huge as the highest rate under the GST is 28 per cent. A new GST band will have to be opened up and that will be an enormous exercise.”

“The better way to do this is to first start reducing taxes (on petroleum products) as I have said many times in public. States impose ad-valorem tax on oil and so they all had a windfall gain (when prices rose). There is a need to rationalise it,” he said, adding “states should especially cut taxes.”

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