- December 21, 2021
- Posted by: admin1
- Category: DPN Topics
Subject – Economy
Context – Centre rakes in Rs 3.72 lakh crore, low basic excise duty limits states’ share
- As of now LPG, kerosene, naphtha, furnace oil, and light diesel oil are under GST.
- Five other petroleum products viz. crude oil, high speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel lie outside the GST.
- Currently, taxes on petroleum products are levied by both the Centre and the states.
- While the Centre levies excise duty, states levy value-added tax (VAT).
- As per recommendation of the 15th Finance Commission, the Centre shares 41 per cent of the tax receipts with states for award period 2021–26.
- States’ share in central petroleum taxes remained low as the basic excise duty was not raised as much as other duties were hiked.
- Petroleum taxes with states are shared only out of basic excise duty. The Centre also levies additional excise duty and cesses on petroleum products.
Cess and Surcharges –
- A cess is imposed on the base tax liability of a corporation or an individual taxpayer, for a specific purpose. Surcharge is a tax on tax that the Union government can use for whichever purpose it deems fit.
- The issue of cess and surcharge is currently not within the mandate of the Finance Commission, as these collections are not part of the divisible pool.
- The government will have to amend Article 269 and Article 270 of the Constitution to make these a part of the divisible pool.