Petroleum and Natural Gas Minister Hardeep Singh Puri said this week said that he along with MoS Suresh Gopi would work towards levying the Goods and Services Tax (GST) on petrol, diesel, and ATF, again triggering speculation that a reduction of fuels would take place if the long-awaited reform is eventually implemented.
This is nothing short of music to the ears of common Indians.
“If the change is finally done, it would mean a huge benefit for the common man,” said John Mukherjee, Indian Oil Dealers’ Forum.
Benefits of bringing petrol, diesel under GST
Elaborating his point, Mukherjee said right now about a total tax component of approximately Rs 40 is levied on petrol the ex-factory price of which is Rs 60.45 a litre.
“Even if petrol and diesel are brought within the purview of the highest level of GST, which is 28%, the impact will be huge. The 28% tax on Rs 60.45 will work out to around Rs 16.92 which will take the price of one litre of petrol to around 77.37 a litre,” said Mukherjee.
Considering the retail price of a litre of petrol to be Rs 94.72 in Delhi and Rs 104.21 in Mumbai, the reduction in the price of these essential fuels will be staggering. It will provide quite incredible relief to the common man and bring down the prices of goods all around the country.
Revenue implications
Though the topic of bringing these fuels under GST has often been raised in the past, loss of revenue to both the Centre and states has been a big deterrent.
In 2023-24 the petroleum sector contributed a total amount of Rs 7.51 lakh crore, out of which the states got Rs 3.18 lakh crore (42%+) and the Centre retained Rs 4.32 lakh crore (57%+). In 2022-23, the contributions stood at Rs 4.28 lakh crore for the Centre out of total kitty of Rs 7.48 lakh crore.
According to reports, a reduction of excise duty on by Re 1 per litre trims about Rs 12,500-14,000 crore revenue of the Centre.
A major expert in GST, BJP leader and former member of Rajya Sabha Sushil Modi, used to say that the Centre has no problem if the states don’t object to it.
Procedure
The way forward for the ministry would be to forward its recommendation to the finance ministry which, in turn, will put it up to the GST Council which is the final authority in these matters.
Legally speaking, the GST Council has to recommend the date from which the tax will be levied on such products.
Union finance minister Nirmala Sitharaman heads the GST Council which has the finance ministers of the states as members.
Even if petrol and diesel are brought under the highest slab of 28% of GST, retail prices could drop by a whopping margin, something that has never happened earlier. But can the public exchequer absorb the revenue impact? Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
