Petrol price can come down at ₹75, diesel at ₹68 under GST: Economists
Petrol price across India is about to touch the century mark soon as the price of auto fuel has been rallying upward for the last couple of days. The petrol price can actually be brought down to ₹75 per litre across the country if brought under the GST ambit, said the SBI economists. This means, applying GST on fuels will bring down the cost of fuels by around ₹30 per litre at places.
Diesel price too would come down to ₹68 per litre and the revenue loss for the Central Government and states will be ₹1 lakh crore or 0.4% of the GDP, as per the calculations made by the economists, considering the global crude prices at $60 a barrel and exchange rate at ₹73 per dollar.
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Petrol and diesel prices on Thursday remained unchanged for the fifth consecutive day. The last change in the prices of auto fuels was made by the oil marketing companies on Saturday. Currently, the highest fuel prices are in Mumbai where petrol is being sold at ₹97.57 per litre and diesel at ₹88.60 per litre.
Petrol and diesel prices in India have witnessed a hike since January 2021 due to a rally in global crude oil prices. Apart from that high amount of state and central government taxes too are playing a key role in the rally of the auto fuel prices in the country. Petrol price in several states including Madhya Pradesh, Maharashtra and Rajasthan have already crossed the ₹100 per litre mark.
The retail prices of petrol and diesel consist of state and central government taxes and dealer commission as well. Around 60% of the pump price of petrol and diesel is attributed to the state and central government taxes as combined. Hence, there have been demands for the reduction of taxes from several stakeholders. States such as Assam, Meghalaya and West Bengal have already announced cuts in their share of taxes.
However, the central government is yet to make any tax reduction announcement that would bring relief for the common people. Meanwhile, the Finance Ministry is discussing the matter with several stakeholders of the ecosystem to bring down the tax to provide some relief to the motorists and common people. The fuel price surge not only affects the people who own vehicles but those as well who don’t own vehicle.
In this scenario, there has been a demand that petrol and diesel be brought under the GST ambit that would bring down the cost of auto fuels. Currently, the taxes on fuel vary from state to state. The states that impose a high tax on fuels will lose in case of implementation of GST on fuels, while the state governments that impose lower tax will see higher revenue generation under the uniform tax structure.