Is GST Solution to Control Skyrocketing Petrol Price?

Over the last few years, the petrol prices in India have skyrocketed, causing immense distress to the common man. Many experts and economists have been debating the reasons and solutions to tackle the issue. One of the proposed solutions is the implementation of the Goods and Services Tax (GST) on petrol.

The GST is a comprehensive indirect tax levied on the supply of goods and services in India. It was implemented on July 1, 2017, with the aim of replacing multiple indirect taxes levied by the central and state governments. The GST is a destination-based tax and is levied at the final point of consumption. The tax is levied at every stage of the production and distribution chain, but the burden of the tax is ultimately borne by the end consumer.

Currently, petrol is not included in the GST regime and is subject to excise duty, state VAT, and additional taxes imposed by the state governments. The excise duty on petrol is levied by the central government, and the state VAT is levied by the respective state governments. The taxes imposed by the state governments vary from state to state, leading to a variance in the petrol prices across the country.

The primary reason for the high petrol prices in India is the high taxes levied by the central and state governments. The excise duty on petrol was increased by the central government multiple times over the years, leading to a significant increase in the petrol prices. The state governments also levy high VAT and other taxes on petrol, further increasing the prices.

The implementation of the GST on petrol would bring uniformity in the taxes levied on petrol across the country. The GST would replace the multiple taxes levied on petrol and would be levied at the final point of consumption. This would result in a reduction in the tax burden on petrol, ultimately leading to a decrease in the petrol prices.

However, the implementation of the GST on petrol would have a significant impact on the revenue of the central and state governments. The excise duty and state VAT on petrol are significant sources of revenue for the central and state governments, respectively. The implementation of the GST on petrol would result in a loss of revenue for the central and state governments.

The solution to control skyrocketing petrol prices is not as simple as implementing the GST on petrol. The high crude oil prices in the international market, the depreciation of the rupee against the dollar, and the high taxes levied by the central and state governments are some of the factors that contribute to the high petrol prices in India.

Thus, while the implementation of the GST on petrol would bring uniformity in the taxes levied on petrol across the country, it is not the ultimate solution to control skyrocketing petrol prices in India. The central and state governments need to reduce the taxes levied on petrol and explore alternative sources of revenue to make up for the loss in revenue.