Petrol and Diesel To Come Under GST?

Petrol & Diesel Price Reduction

Fuel prices have reached a three-year high and now fuel is being considered to be brought under GST.

Oil Minister, Dharmendra Pradhan connects the fuel price hike with shutdown in US refineries due to hurricane Irma. Further, he informs that the petroleum ministry has requested the Ministry of Finance to bring petrol and diesel under Goods and Service Tax. He adds, “There are two kinds of taxes (on petroleum products). One is the central excise and the other one is state VAT. That is the reason we are expecting uniform tax mechanism from the industry point of view.”

Currently, the consumers are paying three taxes on petrol namely Excise Duty (charged by the Centre), VAT or Value Added Tax (charged by respective states) and the dealers’ commission.

The Finance Ministry has yet not responded to the Petroleum Ministry’s request of bringing petrol and diesel under the ambit of GST. However, it is unlikely that GST will suffice to meet the Ministry’s revenue demands. The Council would need to levy additional cess.

Dharmendra Pradhan further informs that the fuel prices might come down by Diwali. However, he did not present any specific reason for the reduction.

Still, the consumers should not hope of reduction in fuel prices as M. Prabhakar Reddy, Chairman of All-India Petroleum Dealers Association states, “Pradhan is right in proposing to include petrol and diesel in GST, as consumers will greatly benefit from this. We too have sent representations to this effect to both the Union finance ministry and the GST Council. However, it seems the Centre and the states won’t let this happen since they heavily bank on petroleum products for revenues and don’t want it disturbed.”