With petrol and diesel set to come under GST, prices may come down drastically.

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New Delhi:

After the 53rd GST Council meeting held on Saturday on the question of bringing petrol and diesel under GST (Goods and Services), Finance Minister Nirmala Sitharaman said that the central government wants to bring petrol and diesel under GST. There has been a long-standing demand to bring petrol and diesel under GST. If this happens, the price of petrol and diesel in the country may come down significantly.

He said that former finance minister Arun Jaitley has made a provision to include petrol and diesel in the GST law. Now the states have to decide on this and they should decide the rates (GST rates) together.

Excise duty is actually imposed on petrol and diesel by the central government. Whereas, VAT is levied by the state government. Apart from this comes the final price including transportation cost and dealer commission.

How are the prices of petrol and diesel determined in the country?

For example, currently the base price of petrol in Delhi is Rs 55.46. On this Rs. 19.90 excise duty and Rs. VAT of 15.39 is applicable. After this, the transportation charges and dealer commission are 20 paise and 3.77 rupees respectively. In this case, the final price is Rs 94.72.

At the same time, the base price of diesel in Delhi is Rs 56.20. On this Rs. 15.80 excise duty and Rs. VAT of 12.82 is applicable. After this, transportation charges and dealer commission are 22 paise and 2.58 rupees respectively. In this case the final price is Rs 87.62.

What will be the benefits of bringing petrol and diesel under GST?

If petrol and diesel are brought under the ambit of GST, there will be a lot of benefit, as the maximum rate of GST is 28 percent.

Petrol and diesel prices may come down significantly

The basic price of petrol in Delhi is Rs 55.46. If 28 percent GST is imposed on it, the tax comes to Rs 15.58. If the transportation cost and dealer commission are 20 paise and Rs. 3.77 is added, the final cost is Rs. 75.01 occurs. In such a situation, petrol can become cheaper by Rs 19.7 per litre.

When GST was implemented on July 1, 2017, it included more than a dozen central and state levies. However, it was decided that five commodities – crude oil, natural gas, petrol, diesel and aviation fuel (ATF) – would be taxed later under the GST law. Finance Minister Nirmala Sitharaman has said that once a decision is taken to bring petrol and diesel under GST, it will be included in the act.



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