Maharashtra ready to bring petrol under GST: Devendra Fadnavis

Javier Stokes
May 27, 2018

When the global oil prices were down, the government had hiked the excise duty on fuel nine times, between November 2014 and January 2016, but reduced it only once, in October a year ago. In past 10 days there is consecutive rise in prices of petrol and diesel for which the Narendra Modi government has to face the public and opposition parties who all are demanding corrective measures.

"On top of this we now the United States' decision to re-impose economic sanctions on Iran which is the third biggest oil producer in OPEC".

The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October past year by Rs2 a litre. Unfortunately, that luck has not stayed for long. On the other hand, the Brent crude price was seen at $79.62 a barrel at one point.

"Bonanza to central government is ₹25 on every litre of petrol".

Interestingly the only time duties on crude prices were cut was last October by Rs. 2 per litre in the run-up to the Gujarat elections while crude prices were kept on a standby during the Karnataka elections.

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Consumers need not look for any respite in fuel prices, cautioned Mukhtyar. The price of petrol charged to dealers during 2014 was Rs. 47.18 per litre while the current charge is Rs. 37.19. India is the most taxed nation in terms of petroleum products among all South Asian nations. This is because of the global oil price fluctuation. Brent broke through $80 a barrel last week for the first time since November 2014.

Prices are highest in Mumbai, with the fuel being sold at Rs 84.99 per litre, followed by Chennai at Rs 80.11, and Kolkata at Rs 79.83. I believe a permanent solution to this problem lies in the inclusion of auto fuels under the GST to bring uniformity of taxes on petrol and diesel otherwise "fuel on fire" situation will keep coming as has come after four years to confront Modi government. There are many states where Value-Added Tax is higher than what it is in Gujarat today.

The finance ministry has provided data on levies on petrol and diesel to the PMO. This is a massive leap from the gross revenue collected in 2013/14 which amounted to 88,600 crores.

Congress leader and former Union Finance Minister P. Chidambaram on Wednesday criticised the Centre for the fuel price hike and claimed that the rate can be reduced by Rs 25 per litre but the government is not doing it.

While company officials prefer a cut in taxes, the government wants a long-term fix to the pricing of the two fuels to smoothly absorb external price shocks.

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