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GST EFFECT! Petrol & Diesel Prices Can Go Down By ? 27 & ? 15

Updated on: 10 Aug, 2023 11:37 AM

Are you planning to go for dinner tonight? Or are you on your way to the office? We bet there is one thing which is definitely on your mind, God! When will the petrol prices stop burning a hole in my pocket. The non-stop hike in the prices of petrol/diesel across the country is surely adding to the worries of everyone. This is one commodity, which touches even the smallest of the consumer. Now the biggest question is, why is our government not doing anything when it is clearly visible that how much everyone is getting affected by this hike in petrol & diesel prices?

Recently, there’ve been a lot of debate regarding the inclusion of petrol/diesel under the provisions of Goods and Service Tax. Presently, there are certain specific items on which GST is not applicable which includes petrol/diesel. As per research by many industry experts, it is being said that with the inclusion of these two items in GST, a relief up to ?27 per litre & ?15 per litre can be given to consumers. Shocking isn't it? Let us break down the facts and understand how it can be true.

The total price of fuel basically comprises of 3 things i.e. Refinery Production Cost, Govt Taxes & Dealer's Commission. In case of PETROL, the cost of fuel to the refinery comes out to be ?36.93 per litre. Adding to this, say CGST @ 14% and SGST @ 14% (assuming GST is applied at highest rate i.e. 28%), which comes to ?10.34 per liter. Further adding the commission charged by the dealer, which is ?3.60 per liter. Hence, the total price of petrol comes to ?50.87 per liter. Similarly, in the case of DIESEL, the cost of fuel to the refinery is ?39.78 per litre, adding to this the GST & dealer commission, ?11.14 & ?2.50 per litre respectively. The total price of diesel comes to ?53.42 per litre. Now comparing this to the prevailing market price of Petrol @ ?78.43 per litre & Diesel @ ?69.31 (in Delhi, as on May 29, 2018), there is the good possibility of the reduction in prices up to ?27 & ?15 per litre in petrol and diesel respectively.

WHY NO STEP IS BEING TAKEN BY THE GOVERNMENT?

After reading the above facts, this is the question which must have gone through your mind. While everyone is in support of including petrol/diesel under GST law. Some experts say that such step will have a huge impact on the center as well as state government's treasury. With Excise at center level and VAT at the state level, the imposition of GST is said to have a negative impact on the govt tax collection. This will ultimately affect its ability to spend on public welfare projects. Having said that, looking at the present scenario as well as the hostility in the minds of the public for the government and upcoming state & center elections, an action needs to be taken soon.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.