‘Petrol, diesel should be within domain of GST’

 

 

 

PETROL and diesel prices have been rising steadily for the past few months. The public is naturally reacting to them and is feeling uneasy. Fuel prices have risen 24 times in the last two months, especially petrol, which has gone beyond Rs 100 per litre. “This has affected the mentality of the people. It is necessary to look at ways to reduce these prices. One of the ways is to bring petrol and diesel under Goods and Services Tax (GST),” said CA Milind Kanade, Secretary, Federation of Industries Association of Vidarbha. He further said that in June 2021, most neighbouring countries have lower fuel rates per litre than India. In Sri Lanka, petrol is priced at Rs 68.18 and diesel at Rs 41.49. In Bangladesh, petrol is priced at Rs 77.78 and diesel at Rs 57.04.

 

The rates are even lower in Afghanistan, where petrol is priced at Rs 46.28 and diesel at Rs 48.19. In 2014, the Government of India deregulated diesel prices and daily changes have been made since 2017. “Since then, public sector oil marketing companies have decided on petrol and diesel prices based on international prices, exchange rates, tax structure, inland freight and other price factors,” he pointed out. Both Central and State governments levy taxes on petrol and diesel. In addition to various State taxes and additional taxes, tax rates vary from 11 per cent levied in the State of Tamil Nadu to 28 per cent on diesel in the State of Odisha. “Apart from this, all the petrol pumps we see and use are funded by the Central Government or private investment. There are about 4,500 pumps in Maharashtra. With an average investment of Rs 3 crore each, it goes up to Rs 13,000 crore. The State Government collects crores of rupees every day from pockets of the citizens through its non-investment system,” he said.

 

On this basis, it is suggested to look at ways to reduce these prices. Kanade said that the Central Government and State governments should reduce prices or reduce taxes with subsidies. “Another way is for State governments to reduce their taxes and cess,” he said. The State governments should leave the share of central excise tax to the public. Other than this, the Central Government should bring petrol/ diesel under GST. In the previous financial year Rs 4,53,811 lakh crore was deposited in the coffers of the Central Government through taxes on fuel and Rs 2,17,650 lakh crore was deposited in the coffers of all State governments. “No Government would be willing to give up on taxes as collection of oil products is very simple,” Kanade pointed out. The Central Government will have to focus on alternative routes to reduce fuel prices by mixing ethanol in petrol. Older public sector refineries get gross refining margin of 2 to 3 dollars compared to new private sector refineries getting 12 to 14 dollars gross refining margin. “With efficient planning, use of crude and distribution pipelines, a reduction of Rs 5 per litre is possible across the country” Kanade added.