Cheaper Fuel Costs Soon: GST on Petrol and Diesel

GST on petrol and diesel is expected to be implemented soon. Hardeep Singh Puri, the Petroleum Minister, stated this on Tuesday. He has resumed his position as Petroleum Minister under Modi 3.0 and made several significant announcements.

One of his key statements was about the ongoing efforts to bring petrol and diesel under the GST framework, a topic that has been discussed previously.

This move could drastically change how fuel is taxed and significantly lower fuel prices across India.

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Current Tax Structure

Excise Duty: Central government tax.
VAT: State government tax, varies by state.
Other State-Specific Taxes: Additional state taxes.

These taxes make up a significant part of the fuel price.

The Proposed Shift to GST

GST would replace multiple taxes with a single, uniform tax rate across India.

Uniform Tax Rate: One GST rate nationwide.
Input Tax Credit: OMCs (oil marketing companies) can claim credits for taxes paid on inputs, reducing their overall tax burden.

Impact on Petrol Prices for Consumers

Several factors determine the current price of petrol. It includes the base price, excise duty, VAT, and other taxes.

Under GST, a single, uniform tax rate will be applied nationwide. This will simplify the tax structure for petrol and diesel.

This change could lead to lower petrol prices for consumers. However, the price reduction will depend on the government’s proposed GST rate.

Nevertheless, this move could make petrol and diesel prices more stable and affordable for consumers.

Pros and Cons of GST on Fuel

Pros

Lower Prices: Consumers can save more money on fuel.
Simplified Tax Structure: One tax rate makes the system easier to understand and comply with.
Increased Demand: Lower prices might lead to higher fuel consumption, boosting the economy.

Cons

Revenue Neutrality: The government needs to balance lower taxes with increased compliance and consumption.
State Revenue Loss: States might lose revenue from VAT, leading to potential resistance.

Forecast: Petrol Prices in the Coming Months

If GST is implemented, you could see a noticeable drop in fuel prices. However, the exact impact depends on:

Final GST Rate: The GST Council’s decision will determine the final rate.
Global Oil Prices: Changes in global oil prices could affect the overall impact.
Government Policies: Ongoing policy adjustments will also play a role.

However, experts believe this move will reduce the price of petrol and diesel by 20–30% in the coming months.

Please visit Kazirangatimes home page for more updates!