Petrol and Diesel Price: Due to the inflation of petrol and diesel, the pocket of common people is getting lighter. Petrol has crossed the Rs 100 per liter level in many places of the country. In order to reduce its prices, it is being suggested to bring it under the purview of GST (Goods and Services Tax) but it is a major source of revenue for the Center and the states, due to which governments will bring it under the purview of GST. She is hesitant. However, according to a report by the Economic Research Department of SBI, if the petroleum products are brought under the GST, then the revenue to the Center and the states will be reduced by a mere 0.4 per cent of GDP by about 1 lakh crores. If petroleum products are brought under the purview of GST, then petrol prices across the country will go up to Rs 75 and diesel to Rs 68 per liter. This report has been prepared by Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor of SBI.
In this way, petrol and diesel prices can be reduced
SBI’s research team has presented an assessment to reduce the prices of petrol and diesel. SBI has refunded this to the government and has said that this can increase the price of petrol by Rs 75 per liter and diesel by Rs 68 per liter. Apart from this, in the SBI report, it is estimated that in the next financial year, the consumption of petrol may increase by 10 per cent on an annual basis and diesel consumption by 15 per cent.
- Crude Price- 60 dollars per barrel (1 barrel = 159 liters)
- Rupee-Dollar Exchange Rate- 73 rupees
- Transportation Charge Rs 7.25 for diesel and Rs 3.82 for petrol
- Dealer Commission Rs 2.53 for diesel and Rs 3.67 for petrol
- Cess- 20 rupees for diesel and 30 rupees for petrol (equal share of center and state).
- GST Rate – 28 percent (14 percent to the center and 14 percent to the state)
Revenue increases due to increased consumption after cuts
SBI’s research team found in its assessment that if petrol and diesel are brought under the purview of GST, then their price can be reduced across the country. Apart from this, if calculated at the rate of Rs 75 per liter of petrol and Rs 68 per liter of diesel, then the budget estimates by the Center and the states will be reduced by only 1 lakh crore rupees, which is equal to 0.4 per cent of GDP. In estimating the reduction in revenue, the research team has also taken into account the increased consumption after the price cut, which means if the price falls, the consumption will increase, the GST deduction will compensate for the decline in revenue.
Crude oil price fluctuations like this
According to an assessment by the research team of SBI, if there is a decrease of $ 10 in the price of crude oil per barrel, then the revenue of the Center and the states will increase by Rs. 18 thousand crores, if petrol price is Rs. 75 and diesel price is Rs. 68. Are kept stable, that is, the government will save this if consumers do not give the benefit of the fall in crude oil. Conversely, if the price of crude oil goes up by $ 10 per barrel and the prices of petrol and diesel are not increased, then the revenue of the government will increase by only 9 thousand crores. In such a situation, the research team of SBI has suggested that the government should create an oil stabilization fund that can be used to compensate for the revenue loss without increasing the price of crude oil.
Maharashtra is the worst loser, some states benefited
If petrol and diesel are brought under the purview of GST, then Maharashtra may suffer the most loss of revenue. According to the estimation of SBI’s Economic Research Team, Maharashtra could suffer a loss of Rs 10,424 crore. Apart from this, Rajasthan can reduce by 6388 crores and Madhya Pradesh’s revenue by 5489 crores.
On the other hand, some states can also benefit from it. There can be an increase of 2419 crores in the revenue of Uttar Pradesh, 1832 crores of Haryana and 1746 crores in the revenue of West Bengal.
Each state has its own tax structure
Every state has its own structure for tax on petroleum products. The state imposes ad valorem tax, cess, extra VAT/surcharge according to its requirement. All these taxes are levied after adding crude price, transportation charge, dealer commission and excise duty. The excise duty is determined by the central government and its rate is the same across the country. Ad Valorem Tax is a form of taxation that is determined based on the value of a property or transaction, such as sales tax or property tax on real estate. Due to many such types of taxes, the prices of petroleum products in India are in the category of the highest countries in the world. Interestingly, there is no transparent system in any country to fix the prices of petroleum products across the world. However, it is very difficult to estimate the prices of petroleum products due to the different system of taxes at the central and state level.