No immediate plans to bring fuel under GST ambit

Many states unlikely to agree due to the impact on VAT revenues

Published: 07th March 2021 10:19 AM  |   Last Updated: 07th March 2021 10:19 AM   |  A+A-


Image used for representational purpose

Express News Service

NEW DELHI:  The finance Ministry is not planning to bring petrol and diesel under the ambit of GST in the near future, even though  some states and economists have asked for the move to give some relief to consumers.“There is no such proposal or even formal discussion to bring petrol and diesel under GST, at least in the immediate future. There is a huge revenue implication attached to it and, even when all the states agree to it, it will take several meetings and deliberations to do so,” a senior finance ministry official told this publication. The official was clarifying on a statement by West Bengal finance minister Amit Mitra, who had said that many states are open to bringing petrol and diesel under GST, and that it was the Centre that has to do it. 

Meanwhile, Finance Minister Nirmala Sitharaman has said that the decision to bring the fuels under GST will have to be taken by the GST Council. “Whenever the GST Council decides to take up this issue, they are well within their interest to take it up and discuss. It’s a call which the Council has to take,” she had said on Friday.

However, the official added that more than the Centre, many states are not likely agree to the move since the VAT levied on the fuel is a major source of state government revenue. According to a recent SBI Ecosurvey report, petrol prices can go down to Rs 75 a litre and diesel to under Rs 68 per litre across India if fuel is brought under the ambit of GST. The report blamed the problem on a lack of political will.

“Centre and states are loathe to bring crude oil products under the GST regime as sales tax/VAT (value added tax) on petroleum products is a major source of own tax revenue for them. Thus, there is lack of political will to bring crude under the ambit of GST,” the SBI report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said.

Petrol prices are currently hovering between Rs 90-100  per litre across the country. While the basic price of petrol is Rs 31.82 per litre in Delhi, there is also a central excise of Rs 32.90 per litre and a value-added tax of Rs 20.61 taking the total tax portion to  Rs 53.51 per litre. Similarly, the basic rate of diesel in Delhi is Rs 33.46 per litre, but total tax charged on it adds another Rs 43.48 per litre, with excise of Rs 31.80 and value-added tax of Rs 11.68 per litre. 

GST petrol


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