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Gst On Fuel A Price Vs Revenue Trade-off
The Central government has announced the new notification on Giving rise to petrol and diesel under GST will not lower fuel oil prices by itself, unless both Union and state governments are tended to take deep revenue cuts. In this article, we will discuss how on GST on Fuel and its significance.
Know GST and its Benefits
GST is an indirect tax established because of the requirement to replace numerous indirect taxes in India, namely VAT, service taxes, excise duties, etc. The Parliament of India passed the GST or the Goods and Services Tax Act on 29th March 2017, and it came into effect on 1st July 2017. Also GST Registration is mandatory to export or import any goods and services.
Rate of GST on Fuel
The increase in global crude prices after August 2020 has led to a sudden rise in fuel prices across the country, which has provoked a demand for including petrol and diesel under GST. It is an enormous misnomer that merely comprising these products under GST would lead to a lowering of pump prices since the maximum rate on these products would be capped at 28 per cent.
While a decision to subsume ...
... petrol and diesel in GST would ultimately lie with the GST Council, prices can be lessened only by lowering the revenue that currently accrues to both the Centre and the states on the sale of these products, whether under GST or outside it.
Additional Notification by Central Government
Further, the Union and state levies put together account for roughly 55 per cent and 52 per cent of the retail price of petrol and diesel respectively; these work out to around 135 per cent and 116 per cent of the base rates of the two commodities respectively.
Moreover, it is worth commenting that of the total central levies on petrol and diesel, Rs 1.40 per litre and Rs 1.80 per litre is the important excise duty for the two fuels, and Rs 11 per litre and Rs 18 per litre is the special following excise duty.
The continuing portion of Rs 18 per litre in both cases is the Road and Infrastructure Cess and Rs 2.50 per litre and Rs 4 per litre.
Know more about GST on fuel: A price vs revenue trade-off.
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