No matter what the politicians speak, Petrol, Diesel, CNG are unlikely to come under GST. The maximum rate for GST is 28%. This is split between the state and the center. Half of it going to the state.
The problem is Petrol, Diesel and CNG are cash cows that attract VAT (Sales Tax) which ranges from 35 to 50% applied by the central government. After this, each state government applies it own rate of VAT on these items. That is why the price of Petrol, Diesel and CNG are not same across the country. Some states apply more taxes and some less. Some states even levy a cess over and above the VAT that they levy.
Bringing these items under GST will lead to a steep fall in revenue for the center and states. In fact it will affect the center more than the states. If these commodities are taxed at 28%, half of that, 14% will come to the state, which is about the same that the state is getting anyway.
For the central government it will be a complete rout. It is estimated that the central government is earning at least 5,00,000 Crores out of taxes on these items. It is a goose that lays a golden egg, every time a hapless citizen goes to the petrol pump. It is unlikely that the Central Government, cash strapped as it is, running a 15,00,000 Crore budget borrowing, is going to kill the bird and try to extract all the eggs at one go!
Same is the case with liquor. It has also been kept out of GST and that is why liquor is cheapest in Goa and most expensive in Karnataka! In fact, it would not be surprising to find out that liquor is being smuggled from Goa to Karnataka. According to some figures release recently, a bottle that costs 100 in Goa costs 510 in Karnataka. And these are states that are geographically very close to each other. Liquor may be flowing into Maharashtra too from Goa.
A greedy government wants to tax its citizens to death, at the source itself. It does not trust the citizens to earn more and pay more taxes. It wants its pound of flesh directly!
