Petrol, diesel prices would come down by Rs 27, Rs 15 per litre if government includes fuel under highest GST slab.

Petrol and diesel prices are skyrocketing and touching new highs. Several solutions are being presented to the government by economists and industry experts on ways to bring down the fuel price. Reluctant to cut losses, the government is weighing on options before taking a step that could either provide a relief to the consumers or hamper its revenue prospects. The government can reduce petrol and diesel prices by Rs 26 and Rs 15, respectively, provided it includes the fuel under the GST, even under the highest slab of 28%.

There is wide spread criticism on levying over 100% taxes on petrol and over 68% taxes on diesel, at a time when people across the country are crying for some relief measures.

Let's assume that the government includes transportation fuel under the highest tax slab of 28 per cent. The basic cost of fuel after it comes out of refinery is Rs.36.93. Add  28% (14% CGST and 14% SGST) of GST in it and also the dealer commissioner of Rs 3.60, the price comes out to be around Rs 50.87. On diesel, the basic cost of fuel after it comes out of the refinery is Rs 39.78 per litre. Add 28% GST, combining both CGST and SGST, to it plus Rs 2.5 per litre as dealer commission, the price comes out to be around Rs 53.30. As per the Indian Oil Corporation's revised fuel pricing for Delhi, the current price of petrol is Rs 77.83 per litre while diesel is Rs 68.75 per litre.

If the government includes transportation fuel under the GST, and applies the highest tax slab of 28%, the petrol and diesel price would be reduced by Rs 26.90 and Rs 15.40, respectively.

So if not for collecting more revenue on transportation fuel, industry experts feel that the government has no reason not to include petrol and diesel under the GST. Any attempt to replace the multi-layered tax levied on fuel with a uniform tax regime of GST would affect its revenue. Though external factors have affected fuel prices in the country, the taxes levied by the Centre and state governments have also contributed significantly to the overall retail fuel prices.