Impact of GST on Fuel Prices

Impact of GST on Fuel Prices
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The Goods and Service Tax (GST) is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services throughout India. The impact of GST on fuel prices has been a topic of discussion since the introduction of the tax regime.

Currently, petrol and diesel are not included in the GST regime and are subject to different taxes and duties imposed by both the central and state governments. The central government levies excise duty on petrol and diesel, while the state governments impose Value Added Tax (VAT) and other local taxes. These taxes are the main drivers of the retail price of petrol and diesel in India.

In recent years, there has been a significant increase in fuel prices due to the rise in crude oil prices, as well as the high taxes imposed by both the central and state governments. The high taxes imposed on petrol and diesel are a significant source of revenue for both the central and state governments.

The exclusion of petrol and diesel from the GST regime means that any changes to the GST rate will not have a direct impact on fuel prices. However, any changes to the excise duty or VAT rates imposed by the central and state governments will directly impact the retail price of petrol and diesel.

While the inclusion of petrol and diesel in the GST regime could lead to a reduction in fuel prices, it is unlikely to happen anytime soon as it would result in a significant loss of revenue for the government. As such, the impact of GST on fuel prices remains indirect, with any changes to excise duty or VAT rates having a direct impact on the retail price of petrol and diesel.

With the recent development that has came across is that the Central Government has already planned and proposed to include the fuel category under the GST rates subject to the co-operation from the State government and authorities. If the step is taken in the right way and succeed then it would be a big blow on the prices of the fuel giving a big relief on the consumers pocket.

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