Instead, the Indian Government is boosting aid and incentives for electric vehicles.
Following discussions about bringing petrol, diesel, as well as natural gas and aviation fuel, under the purview of the Goods and Services Tax (GST), Union Finance Minister Nirmala Sitharaman said on Friday that petrol and diesel will remain outside the purview of GST. While this would have allowed for a price reduction, motorists will still have to pay exorbitant prices.
- Excise duty and VAT are significant revenue sources for central and state governments.
- Motorists are currently paying more than 55% in tax on a litre of gasoline.
- Taxes make up half of the retail price of a litre of diesel.
GST is excluded for petrol and diesel.
According to PTI, the finance minister stated that the GST Council believes it is not yet time to bring petroleum products under the GST regime. The GST Council debated this issue on Friday in response to the Kerala High Court’s directive to the GST Council, in response to a PIL, to include petrol and diesel fuels under GST.
The problem of GST petrol and diesel remains controversial, as both government and state fuel generate considerable revenues as taxes, and neither government is ready to lower its portion of the fuel.
Present petrol and diesel tax
The petrol price in Delhi on 18th September 2021 was Rs 101.19 a litre, Rs 32.90 included excise charge and Rs 23.35 State VAT (Value Added Tax). The two taxes are paid by the club. Rs 56.25 or 55.58% per litre of petrol are taxed by motorists.
For fuel at a price of Rs 88.62/litre, the excise duty component is Rs 31.80 and the retail price is Rs 12.96 VAT. Together, Rs 44.76 or precisely 50% of the sale price is charged by both taxes.
Reasons for price increases in petrol and diesel
The Centre received Rs 3, 34,894 crores in excise duty from petrol and diesel in FY2021. From the perspective of the Centre, it is all too well known that petrol and diesel account for a large proportion of its revenues in the analysis of fuel pricing, particularly at a time when GST collections are low.
States are also financially vulnerable, which highlights the importance of levying a value-added tax on automobile fuels. While everyone is focused on increasing revenue during a difficult Covid-19 period, the customer is suffering in silence.
The government – Center and States alike – also vigorously drives the use of electric vehicles and electric mobility. Although several countries such as Delhi, Maharashtra, Tamil Nadu, Telangana, Rajasthan, Assam and Kerala implemented subsidy and incentive-laden e-mail policies, the recent announcement by the Government of the PLI scheme for India Auto on RS 26,058 has given the electricity industry an enormous boost.