New Delhi

In a last minute compromise deal, the Centre on Monday night decided to keep petroleum out of GST in return for states agreeing to entry tax being subsumed in the new tax regime proposed from April 2016.

On the issue of compensation to states for revenue loss because of subsuming of all indirect taxes in the GST, the Finance Ministry will seek legal opinion on how it can be accommodated in the Constitution Amendment Bill that it wants to bring in the ongoing Winter session of Parliament.

Compromise was reached after an over hour-long meeting between Finance Minister Arun Jaitley and Finance Ministers of seven states, including Punjab, Haryana, Gujarat, Tamil Nadu, Maharashtra, Karnataka, and Jammu and Kashmir.

Concerns of other states have already been addressed.

It was agreed today that petroleum goods would be kept out of the Goods and Services Tax (GST) Bill for initial few years and a decision to include in the new tax regime would be taken later, sources said.

“The matter (GST) was discussed elaborately. The discussions are moving in a positive direction,” Empowered Committee Chairman Abdul Rahim Rather told reporters after the meeting.

Talks between the Centre and the states over GST framework were deadlocked last week over entry tax and VAT on petroleum products being included in the GST regime.

States, which earn over 50 per cent of their revenue from taxes on petrol and other petro products, wanted it to be out of GST so they could continue with levying different tax rates on these products.

States wanted the compensation to be included in the Constitution Amendment Bill in the three rounds of talks that were held last week.

Earlier in the day, Minister of State of Finance Jayant Sinha had said the government expects to table the bill in the current session.

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