Since July 1, 2017, Indians are paying soaring price for fuel as Indian oil companies’ new mechanism of daily price revision come to application. State-owned oil marketing companies have hiked retail prices of Petrol and diesel by Rs 6.17 and Rs 3.69 per litre respectively.
Currently, petrol-diesel are having 45 to 52% taxes on the retail price which are much higher than it would be if petrol and diesel was brought under GST regime.
In last week, first week of September 2017 witnessed Petrol and diesel prices at Rs 69.26 and Rs 57.12 per liter which are far higher than what was on the same day in Southeast Asian countries.
Currently, fuel prices in India are at three years’ high. Recently Petroleum Minister Dharmendra Pradhan tweeted,
“The Petroleum products’ inclusion in GST only way for rational fuel prices,”
If Arun Jaitley headed Finance Ministry and GST council brings petroleum products under the GST, then fuels will be much cheaper.
Mumbai people paid Rs 80 a litre for petrol while in Delhi it is over Rs 70 a litre.
If Government brings Petrol under GST, the price may cut down to Rs 38.10 per litre in Delhi as per 12 per cent GST.
In 2014, when crude oil prices were around USD 98 per barrel, that time in India petrol prices crossed Rs 70 mark. Currently, the crude prices are around USD 50 per barrel.
Why are Petrol, Diesel So Costly in India:
As per the Indian Oil Corporation data for Delhi, the fuel cost is only Rs 26.65 at the refineries.
Dealers get a petrol at a price of Rs 30.70 but people are paying Rs 70.39 per litre in Delhi.
This means Rs 39.41 is added as tax and dealers’ commission on per litre of petrol sold in Delhi.
Government applied GST on most of the items but still petroleum products are under VAT system. Different states have different rates of VAT applicable on petroleum products.
Delhi is having 27% VAT on Petrol while Mumbai has 47.67%. it shows a difference of about Rs 9 in petrol prices in Mumbai and Delhi.
What If Petroleum Comes Under GST:
If government applies GST on petroleum products, then the prices will come much cheaper. Government can apply minimum 12 percent GST.
With 12 percent GST, the petrol will be a Rs 38.1 in Delhi and at 18 percent, petrol will be at Rs 40.05 and also at 28 percent, it will cost only Rs 43.44 per litre.
If the SUV compensation cess is imposed over and above 28 per cent GST on petrol, it will cost Rs 50.91 in Delhi – still about Rs 20 cheaper than the existing rate.
For diesel, at 12 percent GST, it will cost Rs 36.65 in Delhi while at 18 percent it will be at Rs 38.61.
At 28 per cent GST, diesel will cost Rs 48.88 in Delhi. Still if SUV GST cess is applied, then diesel will be at Rs 49.08 per litre.
GST Council can only take the decision to bring Petroleum products under the GST but all sates are not ready to do so as it will cost them a huge loss.
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