Ministries Approach FinMin To Modify GST On Khadi, Bio-Diesel | SupportBiz
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Ministries Approach FinMin To Modify GST On Khadi, Bio-Diesel

Tags: GST, Khadi, Bio-Diesel
New Delhi: The Union Petroleum and Road Transport Ministries will ask for a reduction in GST on bio-diesel from the current 18 per cent to 5 per cent while a note on a new policy on bio-fuels is to be placed for cabinet approval soon, it was announced on Thursday.

"Along with Petroleum Minister Dharmendra Pradhan, we will jointly request Finance Minister Arun Jaitley to reduce the 18 per cent GST (Goods and Services Tax) on bio-diesel and bring it down to 5 per cent," Union Road Transport and Highways Minister Nitin Gadkari said at an event here to mark World Bio-fuels Day.

The high GST on bio-diesel, which attracted zero excise duty, will make it costlier than diesel and, thereby, make it uncompetitive. Describing bio-diesel as a cost-effective, pollution-free import substitute to highly polluting diesel, Pradhan said the Petroleum Ministry is preparing a cabinet note on a new bio-fuels policy in coordination with the Road Transport Ministry.

"A new bio-fuels policy is going to come soon that will detail things like investments, incentives, the maximum assured price etc for the sector," he said. "In a year or two, India's bio-fuel economy will be worth an additional Rs 1 lakh crore providing employment to a lot of unemployed youth and income to our farmers in distress," Pradhan added, noting the potential of bio-fuels that are mostly produced by recycling agricultural and urban waste.

He said the state-run oil marketing companies (OMCs) are ready to invest up to $2 billion in bio-fuel research and development with the recent transfer of the bio-fuel vertical from the New and Renewable Energy Ministry to his ministry. OMCs are already implementing the Ethanol Blended Petrol (EBP) programme under which they sell the EBP with the percentage of ethanol up to 10 per cent.

The government has also allowed procurement of ethanol produced from other non-food feedstocks like cellulosic and ligno cellulosic materials including via the petrochemical route. In this connection, Pradhan noted that India currently needs to import over 80 per cent of its oil and gas requirements at a cost of Rs 6 lakh crore.

It was announced at the event that OMCs have been asked to set up 12 ethanol plants in various states over the coming years. Indian Oil Corp plans to increase the capacity of its bio-fuel refineries to 100 tonnes a day from about 12 tonnes a day in the next two years, IOC Chairman Sanjiv Singh told reporters on the sidelines of the event.

MSME Approach For Khadi:

The MSME Ministry has asked its Finance counterpart to consider exemption of Khadi sector from GST or ensure a seamless flow of input tax credit for Khadi Institutions to claim it, the government said in Parliament today.

At present only Khadi yarn produced in the sector is exempted, while other Khadi products attract a 5 per cent Goods and Services Tax (GST) levy.The entire Khadi and Village Industries sector has enjoyed the benefit of tax exemption even in pre-independence era.

"With the exemption to the SSI sector being drastically reduced from the existing Rs 150 lakh to Rs 20 lakh, the exemption cover enjoyed by many of the Khadi Institutions has been removed. Khadi Institutions are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5 per cent," Minister of State for MSME Shri Giriraj Singh said in a written reply in Rajya Sabha.

The minister informed that the products of the Village Industries sector were taxed at zero to 14.30 per cent before the GST while post-GST, the same products attract 12-28 per cent tax.