Case to get petrol, diesel under the ambit of GST
Speaking at the foundation stone laying ceremony of oil and gas projects in Tamil Nadu on February 17, Prime Minister Narendra Modi said that his government is working to bring gas under the ambit of Goods and Service Tax (GST). “We are trying to eliminate the cascading effect of different taxes. We are committed to bring natural gas under the GST regime,” PM Modi said, calling for global investors to invest in energy projects in the country. At a time when petrol and diesel prices are at an all-time high, and taxes have a bigger component in the retail price than the base price of the fuels, it is worth revisiting the debate on bringing petrol and diesel under the ambit of GST. There are both upsides and downsides to this idea. Here are three charts which explain the basic issues involved.
1. Bringing petrol-diesel under GST will lead to a sharp fall in current prices
Customers are paying more in taxes than the base price for petrol and diesel according to the latest price data for petrol and diesel. According to the information on the Indian Oil website, base price (in Delhi) of petrol and diesel was just ₹33.26 and ₹34.97 on March 1. The retail prices on the day were ₹91.17 and ₹81.47.
