IMPACT OF GST ON PETROL, DIESEL AND CNG PRICES
Petroleum and natural gases have been the topics of debate and concern that whether these items must be kept under GST or not and under which slab of GST. Petrol and diesel were kept out of GST because these products are one of the highly taxed items by the goverment. They are not only major source of revenue for central goverment but also for state goverment as well.
Finance minister arun jaitely announced in the parliament that the goverment is mulling to include petrol, diesel and other products under uniform tax regime.
A few days back GST council member and Bihar finance minister sushil modi expressed his support for the inclusion of petroleum products under the new single indirect tax regime.
IMPACT OF GST ON PETROL AND DIESEL PRICES-
If the GST is rolled out on petrol and diesel, existing taxes such as value added tax (VAT) and exice duty will get removed and thus lessen the tax burden to the tune of 22-35%.
The production cost of petrol, which is sold around 70 per litre across petrol pumps in delhi, stands about 32 per litre and on the other hand, diesel costs 59.82litre across the petrol pumps. But the cost of production is around 33 per litre.
Tax structure of petrol in pre-GST-
1. excise duty-19.48
2. VAT (27% of basic price + additional cess)-14.96
3. Commision of dealer-3.23
5.Actual cost of production-32.3
Petrol likely to be 35% cheaper post GST implementation ( If implemented).
Tax structure of diesel in pre-GST-
3.commision of dealer-2.17
5.Actual cost of production-33.88
Diesel prices to soften 20% post GST (If implemented)
Impact of GST on CNG prices-
Compressed natural gas, abbrivieted as CNG, genrally attracts three basic levies-
1. Basic custom duty
2. 14% additional custom duty
3. 14% basic cenvat duty
The combined duty comes out to be 3% over the cost of production. CNG wil cost 36.57 approx even with 28% GST slab (if implemented).
The impact of Highest GST tax rate slab as well as on lower tax slab on petrol, diesel and cng prices will help in savings of customer as well as maintaing strong budget will help in fighting inflation as well.