Various states are ready for petrol and diesel to come under the GST regime opposite to the perception that they are against the concrete proposal which includes the compensation mechanism through the center.
West Bengal Finance Minister Amit Mitra directed besides problem discussion says the union might not be interested to take the amendment as it earns “much more” from taxes on petrol and diesel.
“(The peak rate of) GST is 28 percent. Under the regime, the Centre would only get 14 percent. So, definitely, the Union government does not want GST on fuel. It is all lies. Currently, they are in a very cozy place,” Mitra recognized.
Beneath the GST revenues are equally shared amid unions and the states through the method of the central GST as well as the state GST. Mitra declares that cesses accounted for 70% of the central taxes upon petrol at present and these were not shared through the method of devolution.
Kerala Finance Minister Thomas Isaac announced the problem can be addressed in the official meeting, with an intention of the compensation “The formula is single. Compensate us for the tax shortfall arising on account of subsuming fuel under GST. We are ready. Let this be discussed in the Council meeting. But compensation has to be worked out in conjunction with states,”
Chhattisgarh Health Minister T S Singh Deo who showed that the state in GST official meetings specified that the states will not be non-benefited if the fuel was acknowledged beneath GST as an equal revenue share, they will get the additional 41 % from the devolution of Central GST (CGT) 
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“However, the amount of revenue that states are getting should not come down. Percentages are inconsequential. If Chhattisgarh is getting Rs 3,000 crore now from taxes on fuel, the revenue under GST should not be lower than this and must grow over the years as consumption goes up. Hence, a compensation formula will need to be worked out,”
If the states will get the secured revenues then they will not be having any problem, however, they have a wrong experience as the central government had stated before times “So the entire decision of the GST regime is under question today because the presumption that the economy would go on improving hasn’t happened — neither before Covid nor after Covid. We will need continued protected revenues because the whole purpose will get defeated if revenues are not protected,”
The talks upon GST compensation for the present fiscal year go longer as well as the problem was solved post the center has been permitted with respect to the states.
The 17 central union and state taxes have been taken under GST wef 1/04/2017. But alcohol, electricity, and some parts of the real estate sector were not included in it. Under GST the petroleum objects were included, however, the tax was not engaged for the products like crude oil, natural gas, aviation fuel, diesel, and petrol. It reveals when the GST official decides to bring these petroleum products beneath the GST which can be implemented excluding any changes in the constitution.
In between the issues towards the higher petrol and diesel prices, FM Nirmala Sitharaman specified that the union and state government will have to work together so to bring the prices to affordable rates.
