After the Central government reduced the excise duty on motor fuels, state governments matched the move by cutting the VAT imposed on motor fuels. Gujarat and Maharashtra have announced a reduction of 4 percent and Himachal Pradesh has announced a 1 percent cut. Meanwhile Uttarakhand has proposed a 2 percent cut in VAT and another 2 percent in cess. This move helps in easing the rising prices of retail fuel and has reignited the debate on uniform taxation on motor fuels and their inclusion under GST.
Even as a section of the Street argues that petroleum products (a key input for almost all industries) should be brought under the ambit of GST, we examine the feasibility of the same in the wake of the raging debate.
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