Hyderabad:Finance Minister Nirmala Sitharaman is all set to host the 45th meeting of the GST Council today. One of the key agendas of this meeting is to discuss the possibility of bringing petrol and diesel under GST. This decision could provide relief to consumers as the prices of petrol and diesel could reduce significantly. In Maharashtra, the petrol price could be reduced by Rs 37 if the GST council decides to add petrol, diesel, and aviation fuel under GST. Currently, petrol is selling at Rs 107.26 per litre while diesel price is Rs 96.19 per litre in Mumbai.
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How Petrol price is calculated in Maharashtra
The calculation of petrol prices in Maharastra are as follows:
Original price of petrol + 93% Excise Duty imposed by Central government + Transporation cost of 19 Paise + State VAT - 26% + State Government surcharge - Rs 10 + Dealer's commission - Rs 3.47
Kedar Chandak, a petroleum products expert, said that petrol is currently priced at Rs 107.26 per litre as of 17th Sept in Mumbai. It costs Rs 41.12 from a petroleum company. Since various taxes are being levied on it by the Central and State Governments, the cost exceeds.
He added that there is talk of bringing petrol and diesel under GST. The central government can impose a maximum of 28 per cent GST. Even if the Centre implements 30 per cent GST and the state government shares 30 per cent of the total GST, petrol in Mumbai can be cheaper by Rs 37 and diesel by Rs 28 per litre.
Petrol and diesel coming to Maharashtra are taxed by the state government. Maharashtra government adds 26% VAT and a surcharge of Rs 10 to 12 is further levied on petrol and a surcharge of Rs 3 is levied on diesel.
How prices will come down
Presently, state governments have put a VAT charge on petrol and diesel, which is on a value after adding the excise duty charged by the centre. It leads to 'tax-on-tax' or in other words, cascading effect which means leading to higher cost. Distributors pass this cost onto the consumers.
With GST, this issue gets resolved. The prices will reduce substantially. GST Council is likely to keep the GST rate at a peak of 28% (CGST+SGST) with a possible levy of cess. While current taxes account for normally 50% of the fuel price, the highest GST rate inclusive of cess would not exceed 40%. Considering that excise duty and VAT put together is still more than what can be levied in GST, the consumers will be paying a lesser price for petrol and diesel.
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Why was Petrol, Diesel kept out of GST
GST was introduced amalgamating over a dozen central and state levies on 1 July 2017. At this time, five commodities namely petrol, diesel, crude oil, natural gas, and aviation fuel were kept out of the GST ambit. The decision was taken because these five products generated higher revenue on which both centre and state depended largely.
What is Maharashtra Government' stance on the issue?
Ajit Pawar, Maharashtra Deputy CM and Finance Minister has said that any attempt by the Union government to change the tax structures that will adversely impact the state government's revenue generation will be opposed by the Maharashtra Govt. He further added that any policy decision that adversely affects state revenue is not acceptable to us. In the name of the uniform tax regime, if states' right to taxation is under threat, it will be opposed.
He also said that despite repeated assurances, the Central Government has not given its dues under GST compensation to Maharashtra. Centre owes Rs 30,000-32,000 crore to Maharashtra. The state is still waiting for rightful dues. The state has also expressed its concern to the Niti Aayog during the meeting held earlier this week in Mumbai.
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