Petrol and diesel to come under GST: Details here
You may soon have to pay both Goods and Services Tax (GST) levied by the Central government and Value Added Tax (VAT) levied by state governments on the purchase of petrol and diesel, as the government is considering to include fuel under a combination of GST and VAT. What all will change with the inclusion of petrol, diesel under GST? Here are the details.
Not pure GST, it'll be a combination of GST, VAT
"There is no pure GST on petrol and diesel anywhere in the world and so in India too it will have to be a combination of GST and VAT," a government official said.
How much GST is government planning to levy on fuels?
The government is planning to bring both petrol and diesel under impure GST structure wherein a peak tax rate of 28% will be applicable, in addition to VAT applied by states. Under the present tax incidence, the Central government levies Rs. 19.48/litre and Rs. 15.33/litre of excise duty on petrol and diesel respectively. On top of that, different VAT is applied by the state governments.
If Centre brings fuel under GST, it'll lose Rs. 20,000cr
If the government gives a go-ahead and puts petrol and diesel under GST, it will lose Rs. 20,000 crore it is currently earning as input tax credit by keeping petrol, diesel, jet fuel, natural gas and crude oil out of the GST regime. Notably, the government doesn't plan to change the present total tax incidence on the fuels after the application of GST.
GST can result in reduced prices of petrol, diesel
"If the multilayered transport fuel tax structure gets replaced with GST, even at a rate of 40% on petrol and diesel (20% each for Centre and state), a big relief in fuel prices can be given," said petroleum pricing expert and fuel dealer Kedar Chandak.
