Petrol and Diesel Prices May Drop by ₹20: Modi Government Plans to Bring Fuels Under GST

Petrol and Diesel Prices May Drop in the Coming Days

The government is considering bringing petrol and diesel under the GST framework. If this happens, the prices of petrol and diesel could drop by up to ₹20 per liter, making the price around ₹75 per liter in Delhi.

Yesterday, on June 22, Finance Minister Nirmala Sitharaman held a GST Council meeting. She stated that the central government is ready to bring petrol and diesel under the GST. Now, the states have to decide on this matter and determine the rates collectively.

Currently, Governments Earn Up to ₹35.29 Per Liter on Petrol

Presently, when you purchase a liter of petrol in Delhi for ₹94.72, ₹35.29 of that amount goes to the central and state governments as taxes. This means you only get petrol worth ₹59.43. This burdens the common people while significantly filling the government coffers.

How Are Petrol and Diesel Prices Currently Determined?

Currently, each state imposes its own taxes on petrol and diesel. The central government also collects its duty and cess separately. The base price of petrol and diesel is currently ₹55.46. The central government charges an excise duty of ₹19.90 on it. After that, state governments impose VAT and cess as per their rates, doubling the price from its base cost.

Petrol and Diesel Could Cost ₹75 per Liter if Brought Under GST

If petrol and diesel are included in the 28% GST slab, the calculations are as follows:

  • Base Price + Freight: ₹55.66
  • 28% GST Tax: ₹15.58
  • Average Dealer Commission: ₹3.77
  • Total Price to Consumers: ₹75.01 per liter of petrol

These prices are estimated post-GST implementation.

Petrol Could Be Available at ₹75 per Liter if Brought Under GST

If the government includes petrol and diesel under the GST framework, their prices could decrease by up to ₹20 per liter. Additionally, the prices of petrol and diesel would be nearly the same across the country. For example, the current prices in Delhi are ₹94.72 per liter for petrol and ₹87.62 per liter for diesel. In contrast, in Bhopal, Madhya Pradesh, petrol costs ₹106.47 per liter, and diesel costs ₹91.84 per liter.

Post-GST, this disparity would no longer exist, and prices would be uniform everywhere. However, this could reduce the government’s tax revenue. Currently, the highest tax rate in GST is 28%. Even if the government imposes 28% GST on petrol and diesel, it would provide significant relief to the general public.

Maharashtra Has the Most Expensive Petrol and Diesel

The highest prices for petrol and diesel in India are in Parbhani, Maharashtra, where petrol costs ₹107.33 per liter and diesel costs ₹93.74 per liter. In Sriganganagar, Rajasthan, petrol costs ₹106.26 per liter, and diesel costs ₹91.60 per liter. The cheapest petrol and diesel are sold in Port Blair, where petrol is priced at ₹82.42 per liter, and diesel is priced at ₹78.01 per liter.

How Petrol and Diesel Reach You

  1. Import: India imports over 85% of its crude oil needs from other countries.
  2. Refining: The imported crude oil is sent to refineries, where petrol, diesel, and other petroleum products are extracted.
  3. Oil Companies: These products are then distributed to oil companies like Indian Oil and Hindustan Petroleum.
  4. Pricing: These companies add their profit margins and the taxes levied by the central and state governments before delivering the fuel to petrol pumps.
  5. Dealer Commission: At the petrol pump, the dealer adds their commission to the price before selling petrol and diesel to consumers.

Akash Shrivastav

My name is Akash Shrivastav, and I am a Blogger. I have 8 years of experience in blogging for Finance, Business, Investment, Stock Market, Cryptocurreny and more. Through my writing, I aim to provide readers with insightful and informative content.