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Exploring Policy Options to include Petroleum, Natural Gas and Electricity under the Proposed Goods and Services Tax (GST) Regime in India
(2014)
  • Sacchidananda Mukherjee
  • R. Kavita Rao
Abstract
The study analyses the impact of keeping crude petroleum, natural gas, motor spirit (gasoline/ petrol), high speed diesel (diesel), aviation turbine fuel (ATF) and electricity out of the Value Added Tax (VAT) scheme. Specifically, the study finds that keeping these items out of the input tax credit mechanism (either partially or fully) would result in cascading. Through an input-output framework, this study proposes some alternatives to the proposed design of GST and assesses the implications for cascading and prices. It captures the degree of cascading across 48 sectors under different scenarios and explores alternative policy options to phase out under-recoveries of oil market companies on account of sales of diesel and petrol under the administered pricing mechanism.
Keywords
  • goods and services tax,
  • value added tax,
  • tax cascading,
  • tax incidence analysis,
  • ad valorem tax,
  • input-output analysis,
  • revenue neutral rates,
  • taxation of petroleum products,
  • India
Publication Date
May 2, 2014
Citation Information
Mukherjee, Sacchidananda and R. Kavita Rao (2014), "Exploring Policy Options to Include Petroleum, Natural Gas and Electricity under the Proposed Goods and Services Tax (GST) Regime in India", Working Paper No. 2014-136. National Institute of Public Finance and Policy (NIPFP), New Delhi, 2 May 2014.