Petrol and diesel prices are touching new highs every day. In some places, petrol crosses Rs 100 per litre and diesel rates have also skyrocketed. While the government says it is talking to oil producing nations to reduce crude prices, there has been no improvement in the situation which is troubling the common man. However, an SBI economist has claimed that the price of petrol can come down by as much as Rs 20 a litre if the government brings it under the purview of Goods and Service Tax (GST).
In the latest edition of ECOWRAP, a report prepared by a research team lead by group Chief Economic Advisor Somya Kanti Ghosh, petrol rates can come down to Rs 75 a litre while diesel could be Rs 68 per litre if brought under the GST regime.
The report said that while implementing the GST system, it was said that petrol, diesel should also be brought under its purview, but this has not happened so far. By bringing the price of petrol and diesel under this new indirect tax system, their price can come down significantly.
The prices of petroleum products in India from central and state-level taxes and tax-on-tax are at the highest level in the world.
By bring fuels under GST, the Central and State Governments will lose revenue of Rs one lakh crore, which is 0.4 percent of GDP. This research has been done by the experts in which the price of crude oil in the international market has been considered at $60 per barrel and the dollar-rupee exchange rate at 73 rupees per dollar.
Taxes petrol-diesel in every state
At present, each state imposes VAT on petrol and diesel as per its requirement, while the Center levies excise and other cesses on it. Due to this, the price of petrol has reached 100 rupees a litre in some parts of the country. In such a situation, concern is being expressed about the high tax rate on petroleum products, due to which fuel is becoming expensive leading to a price rise of basic commodities as well.
Highest revenue source
The report said that the central and state governments are not willing to bring the products of crude oil under the purview of GST as the imposition of sales tax, VAT etc. on petroleum products is a major source of revenue for them. Thus, there is a lack of political will in this case, so that crude oil cannot be brought under the purview of GST.
What the report says
Apart from the crude oil price and the dollar exchange rate, the report has also kept the transport fare at Rs 7.25 for diesel and Rs 3.82 per litre for petrol. Besides, the commission of the dealer is Rs 2.53 in case of diesel and Rs 3.67 in case of petrol. The report has estimated the final price after assuming a cess of Rs 30 on petrol and Rs 20 per litre on diesel and a 28 per cent GST rate that will be divided equally between the Center and the states.
The report said that with the increase in consumption of diesel by 15 per cent annually and in case of petrol by 10 per cent, it has been assumed that bringing them under the purview of GST could have a financial impact of Rs 1 lakh crore.