Fearing revenue loss, HP wants petro goods, tobacco out of GST ambit

The cash-strapped Himachal government has again urged the central government to exclude petroleum and tobacco products from the ambit of GST (goods & services tax).

The state's representative held a series of parleys in New Delhi on Thursday to plead its case. The central government has reportedly offered to compensate for the revenue losses, but the state has been taking a resolute stand on the issue.

Implementation of GST will merge several taxes levied by the state as well as central governments. The Himachal government faces losses of over Rs 640 crore in tax revenues if GST is imposed and may lose Rs 400 crore if central sales tax is abolished. However, introduction of GST will not lead to withdrawal of excise waivers for industries.

Earlier in September, the Himachal government apprised the 14th finance commission about its fears over the rolling out of GST and also sought compensation from the central government.

Sanjay Bhardwaj, joint commissioner of the Himachal excise department, who attended the meeting in New Delhi on Thursday, said the central government had been made aware of the problem through the empowered group of finance ministers. “Not only Himachal but several other states have reservations. Another meeting will be held soon to further discuss the issue,” he added.

A senior official said Himachal wanted the right to tax tobacco and petroleum products, which are huge revenue generators, so that it could impose a tax whenever required. “The central government has however been maintaining its stand on uniform tax for every product”, the official, who did not wish to be named, added.

What is GST?

Goods &services tax (GST) will replace all indirect taxes levied on goods and services by the central and state governments. It is aimed at being comprehensive for most goods and services. GST will be concomitantly implemented by the central and state governments with the central GST and state GST having equal share.
---Anticipated revenue loss due to GST----
Rs 640 crore due to merging of taxes under GST
Rs 400 crore due to abolishing of central sale tax (CST)
Rs 100 on Petroleum products

------ Excise and taxation component in state owned tax revenue (budget estimates 2014-15)

State excise: 940.74 Cr 17.62% of total Tax revenue
Sales Tax: 3195.62 crore 59.86% of total Tax revenue
Total Tax revenue: 5338.30 crore