[d.w.w.]

We can discuss how much ever we want, but this is not going to happen. Fuel is the easiest way to milk public. A common man can escape GST on essentials (veggies, milk, unbranded food grains, unbranded clothing etc) but he needs fuel to commute to work. Almost everyone has to access some means of transportation and cant avoid fuel purchase directly or indirectly. If fuel comes under GST, state governments are set to loose much revenue (GST will be calculated on the actual price, but state tax on fuel is calculated on fuel cost + central govt taxes, so states get tax on tax).

[C300]

Originally Posted by anb

The graph shows how much each state gets back for every rupee given to Delhi. Some states get only 25 paisa for every rupee given to Delhi while some other state gets 1.79 rupees for their 1 rupee contribution. If the minimum return is 75% of what they give to Delhi, most states will agree for the GST in Petrol & Diesel.

Slightly OT.
Don't think this is correct representation.
Based on this logic, MH probably gets the lowest because most of the companies lodge their tax returns in Mumbai e.g SBI operates across the country but lodges tax return in MH.
We can extend the same flawed logic within a state. BLR getting less ROI compared Belgavi and so on.

[Col Mehta]

Does anyone else also smell elections?

[TDCi4Life]

Originally Posted by RaghuVis

I feel, by the time fuel comes into GST, electricity will move out of it considering EV is the direction we are moving into.

Quote of the day

In our glorious country, the right to personal mobility and every possible aspect involving the same, is actually a punishable offence, as long as the automobile industry has existed.

Yet, on a positive note, there is this glorious aggregation called Team Bhp. Like an enduring lighthouse of automotive passion, shining around the extremely (monetarily hostile) environment towards the same.

[Capricorn]

The GST revenue share with states is based on various factors that takes into consideration how much backward the state is. The intention is to make taxation and development more uniform than each state developing vastly different to other states in the same country. Here is a reference graphic by ToI (2 years old that is slightly modified in recent budget)


Naturally developed states are getting less share from GST.

While migrating from kilos of taxes to a single tax, a uniform tax slab like most developed countries would have killed some sectors/work profiles loosing thousands of jobs. Multiple slabs and surcharges/cess are added to have a smoother transition which I belive is done nicely. Opportunistics have taken this opportunity to hike their goods prices and did not pass on the benefits to customers making GST seem like a burden. Revenue models left with states are fossil fuels, tobbaco products, liquor and land. All of them give some handsome cash to respective states and their operational expenditure is based on this.

Fuel is one such thing that impacts life of everyone if price is changed. Not only hike affects but even reduction creates spiralling implications. These are not good always. So even after GST, the fuel rates will have to remain same by adding some surcharges. With current state and central tax structure, even after GST the revenue distribution will remain pretty much the same. Then why is GST needed at all?

• GST surcharges are not permenant. They will be slowly reduced and removed over the period of time. The care is being taken to let industry and economy settle with minor changes. In the long run the tax will be reduced which is not possible with current tax structure.

• Tax compliance will be easy with single tax. Fuel intermediataries/retailers will not have to maintain various ledgers for multiple central/state/local taxes and face extra audits. There will be provision for input tax credits as well making govt as well see tax

• A move towards one nation one tax. Good for FDI.

• Has potential to detect theft and black marketing by using GST framework.

But there are major problems why center will not be too interested to pass on the GST benefits to people. Only small price (~₹10-15) will be reduced for GST marketing purpose.

If the fuel cost is reduced, it will hamper EV adoption. India has already pledged to be carbon neutral by 2070 and 30% EV adoption by 2030. I am yet to see people talking about emmisions or environment in vehicle buying decisions. Running cost is the major factor and has to be kept biased towards eletricity. Reducing fossil fuel price will also increase the demand increasing massive import costs instead of current government push to reduce it.

My take is, central government will try to put fossil fuel under GST for better future but will not push hard for it. We anyway will not have much on our plate immidiately.

[anb]

Originally Posted by Capricorn

The intention is to make taxation and development more uniform than each state developing vastly different to other states in the same country.

The concept of uniform development is like reducing the development of some states (mostly south Indian states ) by giving the tax paid by people of these states to some other states. As per the 15th finance commission, the percentage shares of Karanataka & Kerala are reduced by a massive 22% and Telengana by 12%. Why should the people and state governments of South suffer for some else's fault? If the government policy is like this, none of the southern states will agree for GST in petrol and diesel.

https://timesofindia.indiatimes.com/...w/73861255.cms

[Capricorn]

Originally Posted by anb

As per the 15th finance commission, the percentage shares of Karanataka & Kerala are reduced by a massive 22% and Telengana by 12%. Why should the people and state governments of South suffer for some else's fault? If the government policy is like this, none of the southern states will agree for GST in petrol and diesel.

https://timesofindia.indiatimes.com/...w/73861255.cms

The share of southern states tax revenue has dropped because of correction in the earlier system flaws. Means it used to enjoy higher revenue for not that great reasons.

A part of the change in the relative share of the states may be on account of the change in criteria and weights for what is called the horizontal devolution. Unlike its predecessor, the 15th Finance Commission has used the 2011 Census as the sole criteria for population but has reduced the weight for population to 15% from the earlier 27.5%. While retaining the 15% assigned to geographical area, it has enhanced the focus on forest and ecology from 7.5% to 10%.
It has also reduced the weight of income distance (how much lower or higher than the national average a state is) from 50% to 45% to provide higher devolution to the states with lower per capita income. Demographic performance and tax effort have been brought in as parameters to reward the states performing better on both these counts.

GST is not about fight among states who will get how much. It is about joining together in a single system, making is efficient, reducing business operational costs, effectively making India a better investment destination. Though we still have long way to go in terms of ease of doing business, the reformed law is the step in the right direction.

If I am an industrialist who needs to setup manufacturing plant outside my developed nation, I will compare countries first instead of states in India. Complex tax compliance will be the last thing I would like to look for. Even if TN is earning higher share of tax revenues, I will not invest in India for the lack of GST. Even if it meant India as a whole loosing lot of investment, new tax revenues and jobs, why should I care? I would want simple tax, secure and stable work environment, educated workforce and automation oriented ecosystem.

Maharashtra is the biggest looser in terms of revenues after GST implemention. But then it would help UP, Bihar states to be developed, reduce migration and thus requiring lesser cost to MH on basic infra. It isn't that bad outside numbers.

We have to go fully on GST for all goods and services one day. To be sustainable there is no escape route. The states that seems to be at loss may not be really at loss considering the investment it otherwise would bring in.

In line with industry expectations, GST has had a positive impact on the manufacturing sector by removing the cascading effect of taxes resulting in the reduction of manufacturing costs. Before GST implementation, certain taxes paid by manufacturers on procurements were non-creditable. At a dealer/ distributor level as well, credit of taxes paid on services (such as rent paid to warehouses, logistic costs, retail stores, etc.) were non-creditable. Being costs to the business, manufacturers and dealers/ distributors generally had no option but to in-build such costs into the sale price of the goods. With the embargo on credits being removed, there has been a reduction in manufacturing costs.

On the output side, manufacturing and sale of goods attracted Excise duty and VAT/ CST. Excise duty was generally levied @ 12.5% while VAT was generally levied at the rate of 12.5% or 5% and CST at 2% (in certain cases of inter-state sales). However, in GST only nearly 30 items, mostly luxury and sin items attract a 28% rate whereas the rest are mostly classified under 12% or 18%.

Before the GST, manufacturers were required to file multiple returns and were assessed by various tax authorities. With the implementation of GST, there has been the ease in undertaking compliances because of the automation of tax compliances. Also, the process of assessments and adjudication is expected to become smoother. The automation combined with the e-invoicing/e-way facility has not only positively impacted compliance management but has also started to show the result in revenue collection with the monthly collection constantly exceeding the 1 lakh crore for the last 11 months and reaching 1.68 lakh crore – the highest ever, in April 2022.

Ref: https://m.economictimes.com/small-bi...w/92586897.cms

GST for petrol and diesel is the step in right direction. It may not help much to we as retail consumers, but other industries would be at advantage like aviation, shipping etc.

[digitalnirvana]

Originally Posted by tj123

Wow data shows clear bias against the Southern and opposition ruled states. I don't want to sound political but the data speaks for itself. No wonder these states will never agree to any move which the central government proposes.

An extremely simplistic and frankly incorrect view.
Do you know Maharashtra for instance pays more tax than the next 4 states combined? Multiple factors go into Tax collection (state & central, where companies are registered, and also direct vs indirect which GST is)

It's a known trend that none of the Southern states get back what they contribute towards the centre. But that has nothing to do with the party currently in power. Its an existing status since several decades. Southern states (some not all) significantly bankroll the exchequer. Conversely some very large and underdeveloped Northern and Eastern states are laggards. Have you not heard of the BIMARU acronym it's at least 30 years in use?

OT
Fact is that if the Southern states were a different country, their HDI & GDP per capita would be that of a middle economy. The rest of India has a long way to catch up, and it won't happen anytime soon. Not in my lifetime at least.

[drsachin]

This whole discussion is going into north vs south discussion and it's pointless i feel. India is a union of states and we all stand to benefit from this relationship. It's not just south but some states even in North such as Delhi contributes much more GST per person, then any other state. Even within a state some regions contribute more to GST then others,for example Noida's/Gurgaon contribution to GST per person will put the whole nation to shame, so does that mean people like us who stays in these regions are justified for more benefits. This is just insane logic. Some states contributes GST, some cheap human resources, some stats other natural resources such as minerals etc and whole nation benefits.
I don't know which government state or centre is responsible for higher fuel cost as long it helps our country on the path of development.
An nice examples would be our neighbouring countries such srilanka and Pakistan. Srilanka since a long time had the highest per capita GDP in the region and has one of the lowest fuel taxes. But did it help. It's now bankrupt. Same goes with Pakistan. It now is forced to increase fuel cost to seek IMF bailout. The fuel cost in India now feels cheaper.
We all know fuel cost contributes a lot towards taxes for infrastructure building and there is no denying fact that our nation is going through infrastructure building at a breathtaking speed not seen before. So enjoy the process and don't fret towards fuel cost. Centre contributes a lot towards this infrastructure development so they obviously require more funding sources.

[anjan_c2007]

The pipedream about petrol and diesel coming under GST as I always say is a mirage. States and Union Territories have to be on board to switch over to such a decision which at least the present generation may not see materialise. All including the Centre, States and Union Territories are making merry and can we expect them to retreat? Obviously NO.

To put it sarcastically, ethanol is taxed under the GST regime and is taxed at 5% and costs about Rs 60/- per litre. With the 10% blending was there any reduction in the petrol prices?

And can we expect the Centre to pass on the GST benefit of 5% plus its basic cost, when it resorts to 20% ethanol blending? Again obviously NO, going by precedents and total lack of transparency.