In 2017, the Goods and Tax Act was passed in India which replaced my indirect taxes on goods and services that previously existed. The tax was levied at every point of sale.
But in the chaos of GST, few items were deliberately kept out of the one-nation-one-tax regime. Five petroleum products that include petrol and diesel were amongst them.
Although there have been some talks about including Oil in GST regime Oil Minister Dharmendra Pradhan and Road Transport Minister Nitin Gadkari, there was no immediate action taken.
The petrol and diesel are major players that add a good amount of revenue in the State and Centre’s pocket. Therefore neither of them showed any interest to bring these two petroleum products under the GST regime.
Now and then, the price of Petrol and Diesel increases hurting consumer’s pockets making it nearer to a beyond reach state. Surprisingly, even after the global price of petrol and diesel prices fell since 2014, the government instead of decreasing the prices increased excise duty from time to time. This shows how much our government is concerned about its people. Instead of decreasing the prices and making people’s pockets less burdened, they increased the price to take out the hard-earned money of its people.
The Centre collected over Rs 2.579-lakh crore by levying taxes on the petroleum products in FY19 which was a massive jump from the gross revenue collection of around Rs 88,600 crore in 2013/14. Rs 2.016 lakh crore was the collection amount in 2108.
The price of fuel includes excise duty, value-added tax (VAT), and dealer commission. VAT varies from state to state. After adding excise duty, dealer commission and VAT, the retail selling price of petrol gets nearly doubled. These include rupee to US dollar exchange rate, cost of crude oil, global cues, demand for fuel, and so on. As the prices of international crude oil increase the price in India also see a hike.
Currently, Value Added Tax (VAT) levied on petrol amounts to Rs.14.98 per litre which comes to Rs 32.96 per litre. As for diesel, the excise duty is Rs.13.83 per litre and VAT at Rs.9.47 per litre and the price charged to dealer amounts to Rs.23.30 per litre. The dealer commission varies with the location of petrol pumps. For petrol, it is between Rs 3 – 3.65 per litre. For diesel, it is between Rs 2 and Rs 2.62 per litre.
Already inflation has broken the back of the common man in India. This list of various taxes has added to the ordeal experience of being an Indian.
Levying GST
The present taxes on Petrol and diesel is already beyond a peak rate, Implementing GST would mean the tax rate would be the same at 28% leaving State and Centre with a huge loss. As every state has different tax slabs, many states would experience the fall in price. But, some states may see a rise in the prices.
Moreover, the total amount goes above 100 % over the real cost of fuel. After GST it will increase the Revenue neutral rate to 100%. This will affect the collections and will also disturb the plans of the Centre and state of keeping these cash cows under them.
The government in India never leaves any stones unturned to snatch the hard-earned money of its people. To maintain decorum and to prevent a common man’s pocket getting legally picked by the government, the GST regime is must to be implemented.