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Petrol price: GST has good news in store
Petrol and diesel are out of the GST ambit now. But, what if they were part of the GST regime? Factly.in made a projection of the price of 1 liter of petrol and diesel at various GST rates. It also included the highest GST slab of 28 per cent and a Compensation Cess of 22 percent applicable to SUVs in several states and UTs. Petrol and diesel prices are set to become cheaper under GST regime.
Existing price variation to go off; can states afford to lose VAT revenues?
Hyderabad: Petrol and diesel are out of the GST ambit now. But, what if they were part of the GST regime? Factly.in made a projection of the price of 1 liter of petrol and diesel at various GST rates. It also included the highest GST slab of 28 per cent and a Compensation Cess of 22 percent applicable to SUVs in several states and UTs. Petrol and diesel prices are set to become cheaper under GST regime.
Under GST, petrol price in Hyderabad will be 31.68 per cent cheaper than present price of Rs74.52/litre as it costs Rs 50.91 under 28 per cent GST plus 22 per cent compensation Cess. It would be further cheaper under lower tax brackets. Can states afford to lose VAT revenues on petrol and diesel? Naturally, states will demand for compensation of revenue loss from the Centre.
Recently, Petroleum Minister Dharmendra Pradhan also said that it would be better if petrol and diesel are covered under GST. In this backdrop, an interesting analysis made on prices of petrol and diesel under GST regime. The price variation in Hyderabad and Vijayawada becomes zero as it costs same in both the cities under different slabs of GST.
At present, litre petrol costs Rs1.47 more in Vijayawada. However, it’ll be uniform pricing under GST slabs.
For instance, litre petrol in Hyderabad costs Rs74.52 as on September 13. It'll be Rs38.01 under 2% GST, Rs40.05 under 18% GST, Rs43.44 under GST 28% and Rs 50.91 under GST28% plus 22% Cess.
Similarly, litre petrol in Vijayawada costs Rs75.99 as on September 13. It'll be Rs38.01 under 12% GST, Rs40.05 under 18% GST, Rs43.44 under GST 28% and Rs 50.91 under GST28% plus 22% Cess.
Earlier this month, Pradhan said the dynamic pricing regime would continue despite petrol prices going up by over Rs7 per liter since the scheme was introduced pan-India from mid-June.
The Petroleum Minister said “42 per cent of excise collections are transferred to state government for infrastructure and welfare programmes. Also, many state governments have drastically increased VAT. It's high time GST Council should consider bringing the petroleum products in the ambit of GST.”
