Role of GST in Fuel and Oil Industry
Shambhavi Sharma / 2021-04-08 02:25:04
The rise in global crude prices after August 2020 has resulted in an immediate increase in fuel prices across the country, prompting calls for petrol and diesel to be included in the GST. Since the maximum rate on these goods would be capped at 28 percent, it is a huge misconception that simply bringing them under GST would result in lower pump prices.
While the GST Council will ultimately decide whether or not to include gasoline and diesel in the GST Registration, the only way to reduce prices is to reduce the revenue that currently accrues to both the Centre and the states from the selling of these goods, whether under GST or not.
In Delhi, a litre of petrol costs 91.17 rupees, while a litre of diesel costs INR 81.94. Petrol prices had also surpassed the 100-rupee mark in several states.
Suggestions and Solutions
Fuel prices will fall as a result of the GST, according to SBI economists. Governments earned $4.24 trillion in revenue from the taxation of petroleum products in 2019-20.
If the GST Council wishes to include gasoline and diesel in the GST, it must ensure that governments make the same amount of money from petroleum taxes as they did previously.
In both the state and federal levels, the government reaps huge income from petroleum products. According to the data released, the petroleum sector produced INR 556 lakh crore in revenue for the central and state governments by March 31, 2020. After receiving such revenue, it is reasonable that the state will want to move to a GST system. Consumers, on the other hand, will save INR 30 as a result of this move.
If fuel rates are decreased and fuel prices are placed under the GST umbrella, the combined revenue loss will be 0.4 percent of GDP. The new tax system allows the government to charge up to 160.82 percent on gasoline.
GST On Commercial gas and Auto LPG
According to the Indian Auto LPG Coalition, auto LPG is one of the cleanest vehicle fuels, far superior to petrol and diesel. Comparing auto LPG to compressed natural gas is not unreasonable (CNG). Auto LPG is also the world's third most common car gasoline.
Auto LPG has a number of advantages, including improving the quality of the air we breathe, lowering carbon emissions, and making the planet a greener environment. The Government of India has reduced the price of auto gas under the new GST law, recognising the benefits that would accrue to our nation if it is made cheaper.
The price of commercial LPG cylinders has been reduced by around Rs.69 as a result of the GST. Previously, commercial LPG cylinders were subject to a range of taxes and fees totaling 22.5 percent of the purchase price, including 8% excise duty and 14.5 percent VAT (VAT). Commercial LPG cylinders, on the other hand, are only subject to 18% GST following the introduction of GST.
While only commercial LPG consumers benefit from the new GST law for the time being, the gas industry as a whole benefits from the new taxation regime. However, as time goes on, many car manufacturers will understand the value of LPG-fueled vehicles and will begin to examine this market. The benefits of GST will become apparent once the selling of LPG-fueled cars in India increases. On the domestic front, however, people would have to wait for the new taxation structure to stabilise.