Despite petrol and petroleum products, including diesel and natural gas, being exempt under the GST, practically all filling stations will come under the tax ambit as they also sell lubricants and distilled water, which are not exempt, leading to an increase in compliance costs, industry stakeholders and experts have said. India currently has over 45,000 petrol pumps. “All petrol pumps are selling lubricants and it is under GST. Many of the petrol pumps also sell distilled water and other merchandise due to which each and every petrol pump will come under GST,” Punjab Petroleum Dealers Association President Sandeep Sehgal told IANS. Experts are in fact of the opinion that this will lead to duality of compliances as the petrol pumps will have to file two returns — one for the petroleum products and the other for non-exempt products on which Goods and Services Tax (GST) will be applicable, like lubricants.
“Petrol pumps also sell engine oils, cold drinks and water bottles on which they will have to pay GST and on petrol/diesel VAT (Value Added Tax) will be payable to the states. This will lead to duality and will lead to increase in the compliance cost,” GST expert Pritam Mahure told IANS. “Also, small petrol pump owners will be challenged as they do not have sophisticated software to maintain business records at such a minute level,” Mahure added. Rahul Devidasrao Jadhav, who owns an Indian Oil filling station in Solapur, Maharashtra, said that it will be more work for his accountant, leading to an increase in compliance costs.
“I own a highway petrol pump at Solarpur. We sell distilled water and lubricants. It will be more work for our accountant filing two separate returns for exempt and non-exempt products. Dual tax, i.e., VAT on petrol/diesel and GST on oil and other products, will lead to double compliance for us,” Jadhav told IANS. “Government should try to address these challenges for us,” Jadhav added. “For smooth transition to GST, the government should aim at reducing compliance cost for business. Then only, GST will actually bring ease of doing business,” Jigar Doshi, Partner, SKP Business Consulting, and a GST expert, told IANS.
“Also, petroleum companies should take measures to ensure that they guide petrol pump owners to ensure smooth transition. The government should issue appropriate guidelines to help the small vendors,” Doshi added. The Punjab Petroleum Dealers Association, which has 3,268 petrol pumps in the state as members, has been asking for petroleum products to be included under GST as the VAT rates in the state are higher than in Haryana and Chandigarh. “We would have to file value-added tax and another GST for non-exempt products. We are demanding petrol products to be brought under GST. Petrol is cheaper in Chandigarh and Haryana because of higher VAT in Punjab, so we lose out on business in Punjab. Petrol sales will not grow in Punjab,” Sehgal said.
“The government should levy one rate for petroleum products,” he urged. Petrol and petroleum products have been kept zero-rated under the GST regime. Since 30-40 per cent of states’ income is derived from potable alcohol and petroleum products, the GST Council — which consists of states’ finance ministers — preferred to keep these out of GST as of now. The states, after the first year of GST implementation, would review and decide if these products need to be brought under the new indirect tax regime. The government is targeting July 1 as the GST’s roll-out date.