The taxes on Petroleum Products are presently contributing to almost Rs 540000 crs to Central & State Govts. The Facts are
If these products are brought under GST, the tax may not be capped at 28 %. They may levy some cess to ensure that Revenue from the Petroleum products is maintained
If they do cap the GST on Petroleum products at 28 %, then they have to increase GST on a no of other items. It will be very difficult to find a set of Products which have such high potential for revenue generation. Also, such products may have high elasticity for demand based on price unlike Petroleum products
If at all GST for petroleum products is beneficial to somebody, it will be industry sector who can get extra input credit depending on how Govt frames the rules
Common people have to bear the brunt in any case, whether in the form of tax on petroleum products or some other products.
If Govt settles for less revenue, they may go in for the higher fiscal deficit, which will increase inflation and common is the worst affected.
