Petrol and diesel prices may cut down by half

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Harleen Kaur Grewal

New Delhi, February 25, 2021: The central government is considering reducing petrol and diesel prices. If the GST Council executes the recommendations of Petroleum Minister Dharmendra Pradhan, then petrol-diesel prices in the country will be cut down by half. Two days ago, he said that his ministry is constantly requesting the GST Council to include petroleum products within its ambit, as it would benefit the people. Finance Minister Nirmala Sitharaman seconds this.

Petrol prices have already crossed Rs 100 in some places in Rajasthan and Madhya Pradesh. Tax is the biggest reason for petrol and diesel being expensive. The central government levies excise and state VAT. Right now the central and state governments are collecting more than 100 percent tax in the name of excise and VAT. The rates of these two are so high that petrol of Rs 35 is reaching 90 to 100 rupees per liter in the states. In the national capital, New Delhi, the price of petrol has reached close to Rs 91 per liter and diesel has crossed Rs 81 per liter. The Center has imposed excise duty of Rs 32.98 per liter and Rs 31.83 per liter respectively.

This will affect the rate of petrol and diesel.

If petrol and diesel remain to be sold at a higher GST rate, then the current prices can be reduced to half.
If the GST Council opted for a lower slab, then prices could come down.
There are four primary GST rates in India – 5 percent, 12 percent, 18 percent, and 28 percent.
If petrol is kept in a 5 percent GST slab, it will be Rs 37.57 a liter across the country and the diesel rate will come down to Rs 38.03.
If fuel is kept in a 12 percent slab, then petrol price will be 40 percent and diesel will be 40.56 rupees.
If petrol comes in the 18 percent GST slab, then the price will be Rs 42.22 and diesel will be Rs 42.73.
At the same time, if fuel is kept in the slab of 28 percent, then petrol will be Rs 45.79 and diesel will be Rs 46.36.

States are not willing to bring petrol and diesel under the GST regime. GST was implemented on 1 July 2017. Petrol and diesel were kept out of it at that time due to the high dependency of the states. If GST includes petroleum products, the fuel will have a uniform price across the country. Till now petrol prices have increased by Rs 4.63 per liter and diesel rates by Rs 4.84 per liter. Similarly, petrol has become costlier by Rs 7.22 and diesel by Rs 7.45 in 2021.