Inclusion of petrol and diesel in the GST will help consumers pay a rational price: Dharmendra Pradhan

NEW DELHI: An inclusion of petrol and diesel in the Goods and Services Tax framework will help consumers pay a rational price for the fuel, Oil Minister Dharmendra Pradhan has said after fuel prices rose to record level prompting demand for tax cuts.

Following a rapid rise in the international rates to which local prices are linked, diesel is selling at record rates in the country and petrol at four-year peak. On Monday, diesel was sold for Rs 64.69 per litre and petrol for Rs 73.83 a litre at Indian Oil outlets in Delhi.

Petrol and diesel prices have gained Rs 10.74 and Rs 11.36 per litre respectively in the last nine months in which crude oil has gained $21.87 per barrel to about $70/barrel.


Heavy duties imposed by the Centre and states is key to petrol and diesel being so expensive in the country. In Delhi, petrol bear about 100% and diesel 69% levies comprising excise duty and VAT, according to the latest data published by the Oil Ministry’s petroleum planning and analysis cell.

“There can be no knee-jerk reaction on economic policies,” Pradhan said on demand for tax cuts to bring down fuel prices for consumers while arguing that fuel taxes were needed to fund development work. He also defended market pricing mechanism for petrol and diesel.
“For consumers to get rational price mechanism, the petroleum products will have to be brought into the GST mechanism,” he said, without elaborating how inclusion in GST will make petrol and diesel cheaper.

The highest rate of tax applicable to products under GST is 28%. Since fuel sale is a major source of revenue for states as well as Centre, it’s difficult to imagine them agreeing to cut rates sharply on petrol and diesel.

Petrol, diesel, natural gas, crude oil and jet fuel are currently not included in GST.