Demand grows to bring petrol and diesel under GST as rising fuel prices push rates close to Rs 100 per litre
New Delhi: Petrol prices across India may witness a major reduction of nearly ₹22 per litre if petrol and diesel are brought under the Goods and Services Tax (GST) regime, according to calculations presented by the Chamber of Trade and Industry amid rising fuel prices nationwide.
The demand gained momentum after fuel prices reportedly increased three times within eight days, pushing petrol rates beyond ₹100 per litre in several cities. In Delhi, petrol prices climbed to ₹99.51 per litre on May 23, intensifying public concerns over rising transportation and living costs.
Amid growing pressure over fuel inflation, Chamber of Trade and Industry Chairman Brijesh Goyal has written to Narendra Modi urging the Union government to bring petrol and diesel under GST and eliminate the current system of excise duty and state-level VAT.
Petrol Price Calculation Shows Possible Rs 22 Reduction
According to the calculations shared by Brijesh Goyal, the actual base price of petrol in Delhi currently stands at ₹66.29 per litre. However, multiple taxes and additional charges significantly increase the retail fuel price.
The present petrol price structure in Delhi includes:
- Actual petrol price: ₹66.29 per litre
- Central excise duty: ₹11.90 per litre
- Delhi government VAT: ₹16.03 per litre
- Dealer commission margin: ₹4.42 per litre
This takes the final retail petrol price to ₹99.51 per litre.
Industry representatives argue that the combined burden of excise duty and VAT alone adds nearly ₹28 to the price of every litre of petrol sold in Delhi.
If petrol is brought under an 18 percent GST slab, the tax on the base price of ₹66.29 would reportedly become approximately ₹11.93. Under this calculation, the final petrol price could fall to nearly ₹78.22 per litre.
This would effectively reduce petrol prices by approximately ₹21 to ₹22 per litre compared to current market rates.
“One Nation, One Tax cannot become reality until petrol and diesel are brought under GST,” Brijesh Goyal stated in his letter.
Why Petrol and Diesel Are Still Outside GST
When GST was introduced in 2017, the government promoted the concept of “One Nation, One Tax” to ensure uniform taxation across India. However, petroleum products such as petrol and diesel were kept outside the GST framework.
As a result, individual states continue imposing Value Added Tax (VAT) at varying rates, leading to major price differences in fuel across different states.
Trade bodies and industry groups argue that this system weakens the original objective of tax uniformity and creates an uneven burden on consumers depending on their location.
The Chamber of Trade and Industry has now demanded the complete removal of excise duty and state VAT on fuel and their replacement with a single GST structure applicable nationwide.
Fuel Prices and Tax Burden Become a Major Public Issue
Rising fuel prices continue to impact transportation costs, inflation and household expenses across India. Experts believe bringing petrol and diesel under GST could provide major relief to consumers while also simplifying the taxation structure.
However, economists point out that fuel taxes remain a major revenue source for both central and state governments, making implementation politically and financially challenging.
Currently, no official announcement has been made regarding the inclusion of petrol and diesel under GST, though the demand has repeatedly surfaced during periods of fuel price hikes.
