Fuel price could be Rs. 50 if central, state taxes are reduced proportionately, but Modi Govt least bothered

New Delhi, September 16: It becomes the need of the hour that petrol, diesel should be brought under the range of GST. When they are brought under GST, there will be atleast 22% decline in the rate. According to media reports, if the lowest rate of GST is also instituted, rate could be minimised to half.

After taxation of the Central government, Kerala is taxing 17% for petrol and 12% for diesel. Accordingly when fuel price rises, tax revenue will also increase in the treasury of state government. Thus, around Rs. 525 Crore were flowed into the state government’s treasury last month.

Tax revenue received from GST (around Rs. 1200 crore) is the same as that of the tax received by Kerala treasury from alcohol and fuel. Hence if GST is imposed over fuel rate, income of the state will fall by half.

At this instance, the state will resist such a move in whatever manner possible. Thus state governments stood together in avoiding alcohol and fuel when GST was introduced.

Currently GST tax rates are 5%, 12%, 18%, 28%. Even if GST is imposed, petrol and diesel GST will be more than 12 %. If this is 12%, petrol price in Delhi will be brought down to Rs 38. If it is 18% and 28% GST, price will be Rs 40 and Rs 43.44 respectively.

Even if tax is included, price will be around Rs 50. Then Rs 20 will be less to the current charges. Currently, diesel in Delhi costs Rs 58.72. If 18% or 28% GST is imposed, then the rate of diesel would be Rs 38 and Rs 48 respectively.

At the same time, the Central or State Government alone cannot take the decision to include petrol and diesel into GST. Under the GST Act, only the GST Council is authorised to do so.

Union Minister Arun Jaitley and Petroleum Minister Dharmendra Pradhan have asked the council to take a decision. But Kerala is not taking any stand. Finance Minister Thomas Isaac has influence on GST. Among the state Finance Ministers, Isaac is a financial expert.

BJP states that if Kerala takes initiative, everything could be resolved. It is the states who stood stubborn saying that petrol and diesel should be kept away from GST limit. Kerala stood first in seeking this, when UDF was ruling the sate. Former Finance Minister K M Mani was the Chairman of GST. He did not protest including petrol in GST. Thomas Isaac also stood by the same. It is clear that the stand was to strengthen state treasury. With all these matters, bringing fuel rate in GST limits remain as a distant dream.

Petrol gets 54% increase in excise duties after BJP government came into power. Increase is seen as 46% of VAT and commission for dealers as 73%. At the same time excise duties for diesel is raised to 154%.

The hike has been prevented from getting the benefit of a reduction in crude oil prices. With this, the fuel tax revenue was Rs. 3.32 lakh crore in 2014-15. By 2016-17, it raised to Rs 5.24 lakh crore. State Finance Minister Thomas Isaac told that the tax collected by Central government should be reduced first.

If the central taxes are reduced, state taxes will be reduced proportionately. Now state involve in tax talks to divert attention from real problem. The government has not raised the tax on petrol and diesel prices. Excise duties are increased by the Centre. Isaac said that this is the reason for price hike.

Top