28th September 2017
India is in GST Scenario and it is has been almost three month since GST was introduced. Earlier, there were three major taxes levied on goods and services. Vat, Excise duty and Service tax and then there are Petro products that are out of GST.
In case the petrol products will be included under Goods and Services Tax then this thing is going to take a hit on the state exchequer. Petrol diesel price are getting raised much since there has been variation of prices of Petrol every day. Things have been in the prima facie reason for the spike was a shutdown in US refineries due to hurricane Irma which made global crude oil price rise.
GST would have a great impact on the prices of Petrol and Diesel. Since, there are going to lower down after Petro sector is going to become Under GST. Since Value Added Tax has been at a very higher rate.GST rate on petrol will bring price of petrol down. Presently, There are two kinds of taxes levied on petroleum products. Central excise and state VAT. Therefore, it is expected expecting uniform tax mechanism from the industry point of view.
Existing tax structure
Presently there are three kinds of taxes levied on petrol. These taxes include
· Excise Duty (charged by the centre),
· VAT (charged by respective states)
· Dealers’ commission.
Let’s take an example in the case of capital, Delhi. High costs broke out, a dealer in the capital city paid Rs 30.70 for a litre of petrol. Over this, the middle charged Rs 21.48 for each litre as extract obligation and the state government charged 27 for each penny as VAT which added up to Rs 14.96. Also, the merchants charged a commission of Rs 3.24 and in this way a litre of petroleum cost a customer Rs 70.38.
How GST may change the scene?
On the off chance that, GST is connected on petro items, it will remain to subsume both VAT and extract obligation and will be supplanted by one of the four expansive duty sections of the new expense administration. Accepting that fuel is charged even under the most noteworthy expense section of 28 for every penny, the costs of oil based goods will fall strongly.
For example, if 28 for every penny GST is collected upon the merchants' base cost of Rs 30.70, the buyer should spend Rs 39.30 for a litre of oil, which is Rs 31 not as much as the current cost.
Is GST the arrangement at that point?
While it might run over the easiest answer for handle rising fuel costs, enlisting oil based commodities into GST does not by any stretch of the imagination forecast for good financial matters. As clarified, such a move will take a noteworthy hit on incomes and the state exchequer might be poorer.
The path forward
The GST Council and the fund service has yet not reacted to the oil service's request of bringing oil and diesel and under the GST ambit. In the event that and when the GST Council consents to force GST on petro items, it appears to be improbable that any of the current duty pieces will have the capacity to do the trick the income necessities. In such a case, the gathering may pick to demand an extra cess on fuel, as on account of expansive measured autos and SUVs (Sports Utility Vehicles).
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