Petrol/Diesel to remain excluded from GST in near future

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Varsha Santosh
I like to learn more about the little complexities of life, money

Petrol and diesel will not come under GST in the near future as neither the Central nor the State governments spoke in favor of it. ‘All states were opposed to the idea’, PTI cited a source stating this.

How it affects the government

The Center currently levies excise duty of ₹19.48 per liter on petrol and ₹15.53 per liter on diesel. On top of this the State government collects Value Added Tax (VAT) that total to 45-50% on petrol and 35-40% on diesel. Andaman and Nicobar Islands charges a 6% VAT on both petrol and diesel, least in India. While Mumbai charges 39.12% on petrol.

If petrol and diesel come under GST then the highest tax bracket that can be allotted will be 28%. This will result in losses up to ₹20,000 cr for the Center and revenue shortfall for the States.

In June this year, Rajiv Kumar Vice Chairman NITI Aayog said in an interview with IANS, ‘It (oil) can’t be brought under GST. That’s because the total state and central taxes on petrol put together are around 90 per cent right now. I can’t see how any state will take a cut so huge as the highest rate under the GST is 28 per cent. A new GST band will have to be opened up, and that will be an enormous exercise.’

The collection from excise duty for Central government has increased from ₹99,184 crore in 2014-15 to ₹2,29,019 crore in 2017-18. The revenue collected from VAT has also increased from ₹1,37,157 crore in 2014-15 to ₹1,84,091 crore in 2017-18.

Other petro-products

When GST was rolled out in July last year, 5 petro products were kept in purview. These included petrol, diesel, natural gas, jet fuel and crude oil. As of now, only petrol and diesel will not be included under GST brackets for some time.

Oil Minister Dharmendra Pradhan, Road Transport Minister Nitin Gadkari and Arun Jaitley were amongst the few Ministers who supported petrol and diesel under GST.


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