No Proposal to Bring Petrol, Diesel Under GST: Ministry of Petroleum and Natural Gas Clarifies
The Ministry was answering the question “whether the Government has any proposal to bring petrol and petroleum products under the ambit of Goods and Services Tax (GST)”
The Minister of Petroleum and Natural Gas has clarified that there was no proposal to bring petrol, diesel under the purview of Goods and Service Tax (GST). The Ministry was answering the question “whether the Government has any proposal to bring petrol and petroleum products under the ambit of Goods and Services Tax (GST)”
The minister clarified that a recommendation by the GST Council, which is required by Article 279A(5) of the Constitution, would be the first step towards such a change in tax policy. In order to ensure cooperative federalism, the GST Council, a potent federal organization made up of the Union Finance Minister and the Finance Ministers of each state, is specifically created to reach important decisions on tax issues by consensus.
Although the minister pointed out that the GSTregime already covers Liquefied Petroleum Gas (LPG), there are several obstacles in the way for other fuels with large use. The council recently discussed the inclusion of Aviation Turbine Fuel (ATF) at its 55th meeting, which took place in December 2024. After thorough deliberation, the idea was ultimately rejected.
Because of the fuel's large tax component, which has a substantial impact on airline operating expenses and, ultimately, consumer ticket prices, the inclusion of ATF is regularly discussed at high levels.
Responding to specific, detailed queries from BJP MP Shri Gyanesh Kumar regarding whether any such proposal had been received in the last five years or if any comprehensive impact assessment study had been conducted, the minister stated in the negative on both counts.
Furthermore, the minister termed any assessment of the potential impact on consumer prices as 'premature' at this stage, given the complete absence of a formal proposal. The impact on the common consumer is also not straightforward and is a subject of intense debate.
While a lower, uniform GST rate could potentially reduce the final retail price, a higher rate could have the opposite, inflationary effect. The final price at the pump is a complex calculation involving the base price of crude oil, central excise duty, the dealer's commission, and the state's VAT.
The complex status quo is successfully maintained for the foreseeable future by the government's unambiguous explanation. It will be necessary to effectively navigate the complex consensus-driven process inside the GST Council in order to put gasoline and diesel into the GST's purview in the future.
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