Essential to bring petrol, diesel under GST: Pradhan

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Bhubaneswar/ NEW DELHI, Sept 7 (PTI): Fuel price hike in the country is due to international factors and it has now become essential to bring petrol and diesel under the purview of GST, Union Petroleum and Natural Gas Minister Dharmendra Pradhan said Friday.

The unusual surge in fuel price is due to the political and economic situations at the international level and the Centre has been vigilant about it, he told newsmen here at the sidelines of a function.

“It has now become essential to bring petrol and diesel under the purview of GST. As these two items are out of the GST, the nation has to bear a loss of about Rs 15,000 crore. If petrol and diesel are brought under the GST, it will be better for all including consumers,” Pradhan said.

Asked about the Centre’s steps to reduce oil prices, Pradhan said “One cannot effectively address the situation just by cutting down the rate of excise duty.

“The political situation in countries like Iran, Venezuela and Turkey has impacted the production of crude oil,” Pradhan said adding that the Organisation of Petroleum Exporting Countries (OPEC) has also not been able to increase the production of crude oil despite their promise.

Pradhan said India is constantly in discussion with the US, which has been impacting the crude oil production.

“Yesterday, during the 2+2 discussion, External Affairs Minister Sushma Swaraj had raised the issue of oil price. This apart from the devaluation of rupee has also impacted the price hike of oil,” he said.

Replying to another question, the union minister said the Odisha government has been getting a revenue of about Rs 7,000 crore from petroleum products by raising the tax rate on these products.

“The people will get relief if the state government reduces the tax on petrol and diesel,” he said.

Meanwhile, petrol and diesel price were Friday hiked by about 50 paisa per litre each – the steepest increase in rates since daily price revision came into effect over 14 months back – to push rates to their highest ever.

Petrol price was hiked by 48 paisa per litre and diesel by 47 a litre, according to price notification issued by state fuel retailers.

A litre of petrol in Delhi now costs Rs 79.99 – a record high. It costs Rs 87.39 in Mumbai. Diesel is now priced at Rs 72.07 a litre in Delhi and Rs 76.51 per litre in Mumbai.

Opposition parties have announced nationwide strikes and protests next week over record-high fuel prices which they blame on high taxes.

On Wednesday, Finance Minister Arun Jaitley was remained non-committal on cutting excise duty to cushion spiralling petrol and diesel prices, saying international oil prices are volatile and have not shown any linear movement.

Since mid-August, petrol price has risen by Rs 2.85 a litre and diesel by Rs 3.3 per litre as rupee hit record low against the US dollar, making imports costlier.

Opposition Congress has demanded that the Centre cut excise duty as was done by previous governments, which cut rates whenever international oil prices shot up.

Almost half of the retail selling price of the two fuel is made up of central and state taxes. Prices have been on fire since mid-August, rising almost every day due to a combination of a drop in rupee value and rise in crude oil rates.

On Tuesday, former Finance Minister P Chidambaram had stated that the “Relentless rise in prices of petrol and diesel is not inevitable. Because the price is built up by excessive taxes on petrol and diesel. If taxes are cut, prices will decline significantly”.

The Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 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 the 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.

The central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by 13.47 a litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

This led to its excise collections from petro goods more than doubling in last four years – from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. States saw their VAT revenue from petro goods rise from Rs 1,37,157 crore in 2014-15 to Rs 1,84,091 crore in 2017-18.

Prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT.

 

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