Preparations to reduce petrol and diesel prices in India

AGENCY: WEDNESDAY, MARCH 24, 2021 – As petrol and diesel prices costly in India, the central government has signaled that it will bring fuel under GST.

Union Finance Minister Nirmala Sitharaman has said that it will be discussed at the next meeting of the GST Council. Bringing petrol and diesel under GST can bring down the price significantly. About 60 percent of the price of petrol and 54 percent of the price of diesel are state and central taxes. States levy a variety of taxes on fuel as needed.

Most of the central and state tax revenue comes from sales tax or VAT. That is why governments do not want to bring petrol and diesel under GST. According to government data, the central and state governments collected Rs 5.56 trillion in revenue from the petroleum sector in the fiscal year ended March 31, 2020.

Bringing petrol and diesel under GST would impose an additional burden of Rs one lakh crore on the central and state governments, which is 0.4 per cent of the country’s gross domestic product.

According to a report by SBI economists, bringing fuel under GST could bring down the price of petrol to Rs 75 per liter and diesel to Rs 68 per liter.