Ease the burden of taxation:The inclusion of petrol, diesel, jet fuel, natural gas and crude oil in the GST regime will ease the tax burden of oil and gas companies which at present are subjected to two streams of taxation, GST and VAT.
Compensation assurance: The center has already assured the states of compensation for any loss arising during the period of 5 years. Therefore the opposition to inclusion of petroleum product into GST has no valid basis.
Loss of competitiveness and inflation: The high rates of taxes affect the international competitiveness of the various sectors of the economy. For example- high VAT on Aviation turbine fuel reduces the competitiveness of aviation sector. Moreover high taxes on petroleum have led to high retail inflation as petroleum being the input of various sectors including transportation sector.
Input tax credit: Petroleum products are key inputs for many industries and since they are outside the ambit of GST the user industries cannot claim input tax credit (ITC) on a key raw material. Therefore there inclusion in GST is must.
