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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

Author

Listed:
  • Mukherjee, Sacchidananda

    (National Institute of Public Finance and Policy)

  • Rao, R. Kavita

    (National Institute of Public Finance and Policy)

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.

Suggested Citation

  • Mukherjee, Sacchidananda & Rao, R. Kavita, 2014. "Exploring Policy Options to include Petroleum, Natural Gas and Electricity under the Proposed Goods and Services Tax (GST)Regime in India," Working Papers 14/136, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:14/136
    Note: Working Paper 136, 2014
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    File URL: http://www.nipfp.org.in/media/medialibrary/2014/05/WP_2014_136.pdf
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    References listed on IDEAS

    as
    1. A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
    2. Gupta, Sanjeev & Mahler, Walter, 1995. "Taxation of petroleum products : Theory and empirical evidence," Energy Economics, Elsevier, vol. 17(2), pages 101-116, April.
    3. Hazari, Bharat R, 1970. "Empirical Identification of Key Sectors in the Indian Economy," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 301-305, August.
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    Cited by:

    1. Raghbendra Jha, 2014. "India: Redesigning Fiscal Federalism after the Global Financial Crisis," ASARC Working Papers 2014-07, The Australian National University, Australia South Asia Research Centre.

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    More about this item

    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;
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