VAT on petroleum products to continue, to be decided by GST Council: Minister

MUMBAI: Maharashtra Minister Deepak Kesarkar today informed the Legislative Council that the continuation of VAT on petroleum products and alcohol will be decided by the Goods and Service Tax Council in the next five years.

Replying to a debate on the Maharashtra Goods and Service Tax Laws (levy, amendment and validation) Act 2017 in the Upper House, he said that it is not possible even for the Centre to shift the tax rate of 25 per cent on petroleum products under the new Goods and Services Tax ( GST) regime in one go.

Kesarkar, who is Minister of State for Finance and Planning, clarified that the state has already decided not to hike tax on diesel as it is consumed by goods transport vehicles and any rise would correspondingly affect prices of commodities like vegetables, fruits, foodgrains and other products.

He said VAT on diesel is hence transferred on petroleum products.

"The tax structure under the GST regime will be reviewed by the GST Council after five years," he said.

Responding to concerns raised by members on tax on agriculture, Kesarkar assured that the tax on agriculture income will remain zero per cent.

Replying to queries over effect of demonetisation on the tax revenue collection in the state, Kesarkar said that post-demonetisation the states revenue income has risen by 14 per cent.

On concern raised by Leader of Opposition Dhananjay Munde over recovery of unpaid revenue dues after GST comes into effect on July 1, he said that the Act provides for savings and validation clause that takes care of recovery of unpaid dues.

"The revenue of state will rise as more people are brought under the GST regime," he said.

The house later unanimously passed the tax laws bill which was passed by the legislative assembly on May 20.