CA Vivek Agrawal

CA Vivek AgrawalLet’s first answer why not bringing Petrol and Diesel under GST purview when the Central government can easily get it cleared.

1) It’s very easy and low cost requirement to collect taxes on petrol and diesel than income tax and others.

2) There is very low tax revenue leakages on this items.

3) Excise and VAT laws are not that much transparent, current effective tax rate is around 100% on this items.

4) It will be a fiscal blunder if taxes gets reduced, fiscal deficit will increase and which in-turn will harm more the Indian economy.

5) Due to US sanctions imposed on Iran (one of our major importer) which is going to end on November. So also government is following wait and watch policy.

6) In the current system State has power to levy tax on this item as per their will and such will stop under GST. Further, current system helps state government to maintain tax buoyancy within their state.

Next question, Will bringing petrol and diesel under GST will make prices go down?

Answer is BIG NO

But then why every news channel and politicians says that this will bring down the prices.

1) Rate difference: At present the tax rate is 100% whereas in gst highest it’s 28%. The missing point is that under GST there is Cess also. So therefore the government has full power to exceed this 28%. Government needs to be revenue neutral so there is no doubt cess would not be levied on this items.

2) Blocked GST credit concept: Under this GST concept on few items credit is not allowed even if tax has been paid on input. People think that they will be able to take credit of tax paid on this items but government is too much clever to not allow such credits.

In my view, asking to bring petrol and diesel under GST is just a political gimmick. What seriously the government would have done is to maintain price stabilization fund, alternate fuel solution and boosting exports to keep exchange rate down.

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  1. SURESH says:


    Is GST is being charged (in present system) on Petrol & Diesel ?

    If so, can I get ITC on purchase of same {we used to buy huge qty for our mining industry for various earth moving Vehicles running at site }


    Sir, Please note that maximum rate that can be levied is 40% and not 28% as levied in all items. If Cess at 25% is charged, then it will be 65%.
    At present Excise duty and VAT accounts for 100% on the basic cost. Cost of Petrol is 40/- Excise duty + VAT comes to 40 Total amount payable now is 80 which means 100% tax element is involved. Still we can have benefit of 35% along with ITC. Hopefully, you can expect marginal decrease. Ultimate beneficiary is big industries where they can take ITC for using indirectly in manufacturing process.

  3. Vivek says:

    Aahh.. You understood it wrong.. Current excise and vat tax rate in various states range from 90-100% in aggregate.. It didn’t mean 28%+28%… It mean 28% + 72% =100% to maintain status quo and revenue neutral

  4. Abhutpurv00 says:

    Factually incorrect article you had made an impression by taking an assumption that in case govt also adds Gst cess then it will become 28+28.

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September 2021