How prices will change post GST
If the GST council indeed decides to cover fuel prices under its regime, then there will most likely be a maximum tax of 28 per cent on the base price of petrol, diesel across all states.
This means the different rates of excise and VAT that the Centre and states used to levy on the fuel prices will be replaced with a uniform GST rate across the country.
At present in Delhi, the base price of petrol is Rs 40.78 and including the freight charges, the amount for dealers comes out to be Rs 41.10. This is our base price for petrol in Delhi, as per Indian Oil website.
To this we add excise duty of Rs 32.90, dealer commission Rs 3.84 and VAT on dealer commission Rs 23.35. Calculating the total we get the retail selling price of petrol in Delhi which is Rs 101.19.
Now, if prices start being regulated under the GST regime, this excise duty (which is the Centre’s share) and VAT (state’s share) will be done away with and 28 per cent GST will be levied on the base price which comes out to be Rs 11.50. To this we will add the dealer’s commission of Rs 3.84 and our retail price of petrol comes down to Rs 56.44.
Similarly, for diesel the price charged to dealers is Rs 41.27 in Delhi, as per the Indian Oil website. If we calculate as per the new regime then the price will come down to Rs 55.41 from Rs 88.62 at present.
In the same manner, a litre of petrol in Karnataka currently attracts tax of Rs 59 — Rs 32.9 central additional excise duty (AED) and 35 per cent state sales tax on the sum of the base price (Rs 41.8) and AED. Under GST, the retail rate will decrease from the present Rs 104.7 per litre to Rs 59.2 (including dealer commission of Rs 3). The price of diesel will fall from Rs 94 per litre to Rs 50.
A similar scenario can be observed across states.
Impact on govt revenues
Considering the revenue dependence of the central and state governments on the tax collected from petrol sales, it will be a tough call for the GST Council.
Central excise and state VAT (value added tax) make up for almost half of the retail selling price of petrol and diesel. Bringing them under the GST would impact revenue generation for the states.
