Govt weighs GST plans for petrol and diesel without revenue loss

The government has hinted at bringing petrol and diesel under the Goods and Services Tax (GST) regime, although at the top slab of 28 per cent, if the state governments also agree to it. There might also be some state levies or local sales tax or VAT on petrol and diesel even under the GST regime.

But, all that depends on whether the centre will let go around Rs20,000 crore of input tax credit it receives by keeping oil under the current indirect tax regime.
“A peak tax rate of 28 per cent plus states levying some amount of local sales tax or VAT on petrol and diesel is likely to be the tax structure when the two auto fuels are covered under the GST regime,” reports quoting a top government official as saying.
In any case the timing of including auto fuels in GST will be a political call, which the centre and states have to take collectively, a top government official said.
The peak GST rate plus VAT will be equal to the present tax incidence, which includes excise duty, levied by the central government, and VAT charged by the states.
The centre currently levies a total of Rs19.48 per litre of excise duty on petrol and Rs15.33 per litre on diesel. On top of this, states levy Value Added Tax (VAT) - the lowest being in Andaman and Nicobar Islands where a 6-per cent sales tax is charged on both the fuel. Mumbai has the highest VAT of 39.12 per cent on petrol while Telangana levies highest VAT of 26 per cent on diesel. Delhi charges a VAT of 27 per cent on petrol and 17.24 per cent on diesel.