The Karnataka government is all set to oppose the proposal to bring petrol and diesel into the ambit of Goods and Services Tax (GST) in the GST council meeting scheduled to be held on Friday in Lucknow, Uttar Pradesh.

The decision is being taken considering the fact that, if petrol and diesel are brought under GST, the state would face a revenue deficit up to Rs 700 crore.

"We need time to recover from the economic slowdown after Covid-19 lockdown for two years. Instead, we will demand the Central government to grant compensations for another two years. The situation of the state will be presented to the Union government and GST Council effectively," said Basavaraj Bommai, the Chief Minister of Karnataka.


C. Shikha, the Tax Commissioner of Karnataka, will attend the GST council meeting on Friday. She has been briefed to press for a longer compensation period and Karnataka's stand on bringing petrol and diesel into the GST net.

The Central government has asked the state government's opinion to bring fuel into the GST net. The proposal of the Central government is said to be for regulation of the prices of fuel in the country. It is believed that the new step will bring down the prices of fuel and reduce the burden on people.

The Centre's decision to bring fuel into the GST net is expected to bring petrol prices down from Rs 104 per litre in Karnataka to Rs 59 and the price of diesel will fall from Rs 94 to Rs 50 as both state and Centre will have to share only 28 per cent of taxes levied on fuel equally, say experts. It is expected to create a major financial deficit to the state. The Center will also lose out on revenue.