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Petrol, diesel should come under GST:
Context
To include or not to include petrol and diesel under GST
What is the issue?
Though the prices of petrol and diesel are being revised on a daily basis, in the last two months prices of the petrol and diesel has seen a spike of Rs.7.3 per litre.
What has led to the price rise?
States have drastically increased value-added tax.
Why is there no tax cut to reduce the impact of the rising prices?
- The government does not intend on tax cutting to soften the blow of the relentless rise in prices as the government need to finance huge infrastructure and social projects has to be balanced with consumer need
- Along with this, the global prices had risen due to factors such as the hurricanes in the U.S., owing to which 13% of US refinery capacity has shut down.
- Government also is criticizing the claim for tax cut saying that after the daily price revision started, the drop in the prices that for over a fortnight, is being totally ignored by the people and they are highlighting only on the “temporary” phenomenon.
- Another point put forward by the government so as explaining why it is not taking any action on spiked prices is that – the government will not interfere in day-to-day operations of oil companies. It will interfere only to improve operational efficiency of oil companies
What is the solution prescribed by the authorities?
From the point of the administration, rather than making a tax cut, a better solution would be to include petrol and diesel in the GST regime.
Why rates are being revised on a daily basis?
- India relies on imports to meet 80% of its needs
- So, domestic fuel rates have been aligned to the movement of equivalent product prices in the international market
- Earlier the rates were revised and changed every fortnight, but since July 16 they are being revised daily.
- The rationale behind this is that the daily revision immediately passes on the benefit of any reduction in international oil prices to consumers and avoids sharp spikes by spreading them in small doses
