(LiveMint)
The highest GST rate of 28%, plus states levying some amount of local sales tax or value added tax (VAT), on petrol and diesel is likely to be the tax structure when the two auto fuels are covered under the goods and service tax regime, a top government official said. The peak GST rate plus VAT will be equal to the present tax incidence, which is made up of excise duty, levied by the central government, and VAT charged by the states.
But before GST on petrol and diesel, the Centre has to decide if it is willing to let go of the about Rs 20,000 crore of input tax credit it currently pockets by keeping petrol, diesel, natural gas, jet fuel and crude oil out of the GST regime that came into force from 1 July 2017, the official said. “There is no pure GST on petrol and diesel anywhere in the world and so in India too it will have to be a combination of GST and VAT,” said the official, who is closely involved with the GST implementation. The timing of including petrol products in GST will be a political call which centre and states have to take collectively, he said.
The Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy VAT—the lowest being in Andaman and Nicobar Islands where a 6% sales tax is charged on both the fuel. Mumbai has the highest VAT of 39.12% on petrol while Telangana levies highest VAT of 26% on diesel. Delhi charges a VAT of 27% on petrol and 17.24% on diesel.
