Petrol prices can come down to ₹75, diesel to ₹68 under GST: SBI economists

Petrol price can go down to ₹75 a litre across India if brought under the ambit of the Goods and Services Tax (GST), but there is a lack of political will, which is keeping Indian oil product prices at one of the highest in the world, economists at SBI said on Thursday.

Diesel will come down to ₹68 a litre and the revenue loss for the Central Government and states will be only ₹1 lakh crore or 0.4% of GDP, according to the calculation by the economists made under the assumption of global crude prices at $60 a barrel and exchange rate at ₹73 per dollar.

The SBI economists said bringing petrol and diesel under the goods and services tax is an unfinished agenda of the GST framework and getting the prices under the new indirect taxes framework can help.

“Centre and states are loathe to bring crude oil products under the GST regime as sales tax/VAT (value added tax) on petroleum products is a major source of own tax revenue for them. Thus, there is lack of political will to bring crude under the ambit of GST,” they said.

Every state has its own tax structure. The states choose to levy a combination of ad valorem tax, cess, extra VAT/Surcharge based on their needs. These taxes are imposed after taking into account the crude price, the transportation charge, the dealer commission and the flat excise duty imposed by the centre. The multiple taxes have made POL product prices one of the highest in the world, they added.

The Centre also collects its own duties and cess. Petrol prices have touched ₹100 per litre in some pockets of the country and concerns are being expressed about the high taxation which is making the fuels dearer.

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