Fuel Challenge: The Narendra Modi government is under fire for record high petrol and diesel prices and currently mulling both ‘long-term’ and ‘immediate’ response towards the volatility of fuel price. And while Prime Minister Narendra Modi has not responded to Rahul Gandhi’s fuel challenge, the Aam Aadmi has suggestions that may help reduce the fuel price. 81% people feel that petrol and diesel should be brought under the ambit of Goods and Services Tax (GST), a survey has shown.
People have suggested that once petroleum products are brought under the GST, the states could be allowed to add a cess to it to cover up some of their revenue losses and the centre could reimburse them yearly to balance their ledgers, a survey of 15,000 Indians conducted by LocalCircles showed.
About 42% said states should move to levying an absolute Value Added Tax (VAT) than to do it on ad valorem basis, while 36% favoured tax cut by states to provide the cushion against the rising price. About 22% said that the excise duty levied by the central government should be made a flat Rs 5 on both petrol and diesel.
Also Read: Reality check: Can Modi cut petrol price by Rs 25 a litre, as P Chidambaram claims
Even experts are of the opinion that bringing petrol and diesel under the GST would help to bring the price down even as they say that a steep cut in excise duty on fuel prices would not be a good idea for fiscal prudence. “With the sharp recovery of crude oil prices globally and with the increase in the prices of the auto fuels, the inclusion of petrol and diesel under the GST will help in rationalising the prices of these auto fuels,” Care Ratings said in a report.
On Thursday, Maharashtra Chief Minister Devendra Fadnavis also pitched for bringing petrol and diesel under the purview of GST, saying it would ensure reduction of rates. Notably, Maharashtra levies 25% VAT on fuel in Mumbai — which is the highest tax rate in the country. Moreover, the state also levies several cesses, including drought cess taking the total tax to 48.98%. The state VAT on petrol is above 25% in over 20 states, while on diesel is above 20% in at least 15 states.
Raised for the 12th consecutive day, petrol prices on Friday shot up by 36 paise in Mumbai to Rs 85.65 per litre in Mumbai. Meanwhile, diesel prices were hiked by 24 paise to Rs 73.20 per litre in Mumbai. In the national capital Delhi, petrol prices were hiked by 36 paise to Rs 77.83 per litre and diesel by 22 paise to Rs 68.75 per litre.