Petroleum products under GST? Here's how it would benefit consumers

New Delhi: After Oil Minister Dharmendra Pradhan recently said that GST Council should consider bringing the petroleum products in the ambit of GST, questions are being asked as to whether the government will accept the idea or not.

Market watchers are saying that if government goes ahead with Pradhan's suggestion and include fuel prices under the ambit of GST, there will be a steep downfall in the prices.

What happens if petrol and diesel prices come under GST ambit?

Assuming that the government brings petrol prices under 12 percent GST bracket, then petrol price could come down to Rs 38.1 in Delhi while at 18 percent, petrol price will come down at 40.05 a litre. If the government pushes petrol to highest GST tax bracket of 28 percent, then it will cost Rs 43.44 per litre in the national capital.

Similarly, if government brings diesel prices under 12 percent GST bracket, then it will be sold at Rs 36.65 in Delhi. At 18 percent GST, diesel will cost Rs 38.61 while at 28 percent GST, it will cost Rs 48.88.

Excise duty on petrol and diesel

The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre.

The duty hike resulted in government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

The windfall from the excise duty hikes helped the government bridge its budgetary deficit.

Current fuel prices

Petrol price was hiked by 4 paise a litre and diesel by 6 paise per litre on Friday (15th September 2017.) After the revision in price petrol price in Delhi costs Rs 70.43 while diesel price costs Rs 58.80.

While petrol prices have increased by over Rs 7.32 to per litre in Delhi, the highest since August 2014, diesel rates have risen by over Rs 5.36.