Maharashtra seeks share in cess, surcharges levied on diesel, petrol

The Maharashtra government has demanded for share in the cess and surcharges levied on petrol and diesel, collected exclusively by the Central government, to help the state governments in their fights against the Covid-19 pandemic. The state, in the 43rd Goods and Services Tax (GST) Council meeting held on Friday, also demanded extension of the protection and compensation period by five more years.

State finance minister Ajit Pawar raised various demands related to GST regime, including share in one of the highest tax collections by the Centre. He said states should get share from various cess and surcharges levied on petrol, diesel and petroleum products. The collection of such heads was a whopping ₹3.30 lakh crore in 2020-21.

“The revenue earned out of these taxes, duties may be suitably shared with the states at this critical juncture to strengthen our fight against the current pandemic,” he said.

He also demanded the five-year period of protection and compensation given to the states against revenue losses be extended by five more years. The Centre had said it would compensate states against their losses due to the new regime for five years, since the rollout of the GST regime in July 2017. “Economic impact of the pandemic cannot be nullified in one or two years, and hence it needs to be extended till 2027,” Pawar said.

The cash-strapped state government has also demanded immediate release of ₹24,000 crore pending with the Centre towards GST compensation from the previous financial year. The state also said the compensation set for the current financial year is based on the over-optimistic estimates of revenue generation and needs to be re-examined and corrected. “It will help states in getting more compensation if the estimates are revised taking the losses to the second wave of Covid-19 into consideration,” said an official from the finance department.

The state has also demanded easing out taxes on medical items used in the fight against Covid-19 and vaccines. “The tax rate on medical grade oxygen, oxygen concentrators, pulse oximeter, testing kits and material needed for vaccination should be reduced. The quarterly payment and quarterly return system meant for small taxpayers should also by simplified, as they are the driving force of the system,” Maharashtra government stated in the meeting.

The government has also demanded to continue 18% taxation on undenatured alcohol under GST and to not put it under Value Added Tax.