The rising prices of petrol and diesel have a direct impact on the pockets of common people. Many times the question arises that why their price is so high, whereas the actual price is much less. The main reason for this is the tax system. Currently, the central government imposes excise duty on petrol and diesel and the state governments add VAT, due to which the price increases significantly. In such a situation, if these fuels are brought under the ambit of GST, there can be a big relief in prices.
In today’s situation, the base price of petrol in a city like Delhi is around Rs 55-56 per liter and diesel is also around the same. But when excise duty, VAT and dealer commission are added to it, the price crosses Rs 90. That means more money is paid as tax than the actual price.
What will happen if 12% GST is implemented?
Suppose only 12% GST is imposed on petrol and diesel and all other taxes are removed. In this situation, tax on petrol will be around Rs 6-7. After this, after adding dealer commission, the price of petrol can come down to around Rs 68-70 per liter. That means it could be cheaper by about Rs 20 from the current price. Talking about diesel, its price can be around Rs 67-68 per liter with 12% GST. This is also much lower than the current level and can prove to be a relief for the common people.
What will be the price if 28% GST is imposed?
Now if higher rate i.e. 28% GST is implemented, then the tax on petrol will be around Rs 15-16. According to this, the price of petrol can go up to around Rs 75-80 per liter. Whereas the price of diesel can remain around Rs 72-75. This will also be less than the current prices, but the relief will not be as much as 12% GST.
Why can oil become cheaper due to GST?
The biggest advantage of GST is that there is no tax on tax in it. Currently, first excise is levied and then VAT is added on top of that. But in GST, only one tax is levied, which reduces the total burden and increases the possibility of price reduction. The question is that if the benefits are so clear then why petrol and diesel have not come under GST yet? The reason for this is the earnings of the states. States get huge revenue from VAT. If it ends, their income will be affected.
Also read- Amidst global tension, FMCG sector is booming, there is a huge jump in the growth of these companies.