In the back for Bharat Bandh today, Bangalore Chamber of Industry and Commerce sought the intervention of GST Council to immediately plug the skyrocketing petroleum prices in the country by integrating petroleum products into the ambit of GST. In the two-month span, petroleum prices have increased by Rs. 7 per litre of petrol in Bangalore while it is much higher in other parts of the country.
Mr. Kishore Alva, President, Bangalore Chamber of Industry and Commerce (BCIC) & Joint President and Executive Director, Adani - Udupi Power Corporation Ltd said: “Since it is well within the executive powers, the GST Council, should bring petroleum products under the ambit of GST. In our view this is the only way out to offset the ever increasing prices of petrol and diesel in the country.”
While most of the taxable articles moved under the GST regime, petroleum products are still governed by VAT system. Different States have different rates of VAT applicable on petroleum products. This is the major cause for price difference of Petroleum products among the States. Crude prices have surged recently due to the decisions by oil-producing countries to reduce the production. The incidence of taxes on Petroleum Products is nearly 50 percent of the retail prices in India.
Mr. Kishore Alva said: “BCIC has maintained that inclusion of Petroleum Products under GST would result in giving the economy a boost, which will be sharply accentuated with the successful roll out of several economic reforms announced in the last one year.”
Mr. Kishore Alva further said that higher domestic prices are considered negative for heavy oil importers like India. This often has a cascading effect on inflation, limits the ability for rate cuts by the central bank and increases demand for foreign exchange.
The Chamber is of the opinion that apart from the obvious inconvenience to the common man - the rise in oil prices and the falling rupee represent a danger to India's fiscal and current account deficit, as rising oil prices are likely to lead to a further depreciation in the rupee. India imports nearly 82 percent of its oil requirement.