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Do you think that petroleum products should be included under the goods and services tax (GST)? Critically Examine.

Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

5. Do you think that petroleum products should be included under the goods and services tax (GST)? Critically Examine. (250 words)

Difficulty level: Moderate

Reference: The Hindu

Why the question:

The GST Council might on Friday consider taxing petrol, diesel and other petroleum products under the single national GST regime, a move that may require huge compromises by both central and state governments on the taxing these products.

Key Demand of the question:

To debate on including petroleum products under the ambit of GST.

Directive word: 

Critically examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a fair judgment.

Structure of the answer:

Introduction: 

Begin by mentioning when GST was introduced the petroleum products under kept out of its ambit and recent discussions have taken place on its inclusion.

Body:

In the first part, mention many economists supporting the proposal as the effective rate under GST regime would be lesser than the current prices, benefit of input credit to certain industries, and equitable revenue distribution between Centre and states etc.

In the next part, Mention about the debate surrounding the topic on lines of states’ apprehension, loss or revenue and autonomy, disgruntlement with the current GST sharing of revenue, GST compensation.

Conclusion:

Pass a comment on whether or not the move is welcome in the current scenario and suggest a way forward.