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Budget 2020 expectations: Modi minister drops big hint, these two commodities may come under GST

Debjit Sinha
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Budget 2020 India: With months to go for Budget 2020, Oil Minister Dharmendra Pradhan has expressed hope that Finance Minister Nirmala Sitharaman will signal the intent to bring jet fuel, as well as natural gas under the ambit of Goods and Services Tax (GST). FM Sitharaman is expected to present the Union Budget in Parliament on February 1, 2020. According to a PTI report, Dharmendra Pradhan said that he expected that the intent to include aviation turbine fuel (ATF) and natural gas in the GST will be spoken of in the Union Budget 2020 speech. The aim is to reduce the multiplicity of taxes as well as improve the business climate.

On July 1, 2017, the GST was introduced by the central government. Seventeen central and state levies were included in the GST. However, five commodities namely; ATF, natural gas, crude oil, diesel, petrol were kept out of the purview of the GST keeping in mind the revenue dependence of state governments on this sector.

If the ATF and natural gas are included in the GST, firms would be able to set off taxes which they have been paying on input. Apart from this, the inclusion of ATF and natural gas in the GST will bring uniformity in taxation on the fuels across India. If natural gas is included under the purview of GST, it will drive the consumption. This move will also incentivize producers to invest funds on finding and producing. It will also encourage importers to bring in more LNG, the report said.

ATF amounts to almost half of the cost of an airline. The rates vary from state to state as the price is dependent on the local Value Added Tax. The aviation ministry has been seeking inclusion of ATF under GST because if there is a surge in international oil rates, it gets reflected in domestic jet fuel prices. This leads to costlier flight fares, the report stated.

Inclusion of natural gas in the GST would boost the usage of environment-friendly natural gas. Natural gas is considered as essential industrial input pertaining to industries such as power and steel. If it comes under GST, it would help firms eliminate the cascading impact of taxes. This would then bring down prices of CNG and piped natural gas, the report added.