Bring retail fuels under GST

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Retail price of petrol in my village was around INR 67 in March this year which is 73.03 today. Over these six months, the crude oil price came down from USD 56 to USD 53 per barrel. Means, when the crude became cheaper by INR 1.19 per litre (1 barrel = 159 litres, 1 USD = INR 63; hence USD 3 per barrel means (3*63)/159 = INR 1.19) the petrol became costlier by INR 6 per litre.

I really do not understand the economics behind this pricing mechanism ! What I have learned is, when the cost of raw material drops, the cost of the product must follow the suit. I have never heard the cost of the product goes up when the raw material becomes cheap; And if it happens, there is no doubt that the manufacturing firm is making exorbitant profits ! And this is what happens in India today, at the cost of the ruling governments.

In 2012, the crude costed USD 110/ barrel and today it is around USD 53/ barrel. The retail fuel prices in India remains almost same in 2012 and today.

Excise duty (being paid to the Union Govt) on petrol was hiked from INR 9.20/ litre to 21.48/ litre (133.5% hike) and the same on diesel was hiked from INR 3.46/ litre to 17.33 (401% hike) over these years.

VAT (being paid to the state governments) on petrol was 20%, which was hiked to 27% (35% hike) and VAT on diesel was 12.5% which was hiked to 16.75% (34% hike) over these years.

In nutshell, the cash thirsty Union and State governments got benefited from the price drop of International crude prices and the common public in India are again being fooled by the mockery of the great Indian System.

The GST council intelligently kept retail fuels and liquor out of the GST circle - reason: these two are the main two sectors which cough up the maximum revenue to the Union and State Governments. The maximum slab in GST is 28% whereas, retail fuels are taxed at 133% and 96% (petrol and diesel respectively) and liquor, being a state subject, is taxed at 200-300% across the states.

In India, we are bound to pay Income Tax, road tax, GST+CESS on vehicles and the governments again find it an easy way to squeeze out tax from the public as these exorbitant 133 and 96% tax on retail fuels.  

Sometimes, it is being stated by the Oil Marketing Companies that retail prices are hiked to make it in par with the international prices. What a joke ! We are Indians and we do have Indian standards. We do not live in international standards and you better think about the cost of manufacturing and forget about the international price ! A cup of tea may cost USD 2 in the US, but it will cost just INR 10 in India. What if someone charges INR 120 for a cup of tea and says it is the international price ? Will you agree or shout at him ?

Hence, we need retail fuels be included in GST list to get rid of this Tax Terrorism. The common people of India should get benefited from the price drop of petroleum crude. Also, the daily pricing mechanism be withdrawn and the Union government should hold the full control on determining the retail price of these motor fuels.



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