Why do petrol and diesel prices not fall under GST?
Petrol and diesel haven’t been brought under the regime since it is the biggest source of revenue for the centre as well as the state governments since it is a basic necessity and heavy taxes are levied upon the petrol and diesel.
Presently, the central excise duty i.e. the tax generated to central government on tax is 23% and the VAT which is generated by the state governments is around 34% making the total tax to be 57%. Now, if the government would have imposed GST on diesel and petrol as well then the highest limit of tax they could have generated would have been 28% as this is the highest value of GST fixed in the GST Council which would have affected the revenue of bot central and state governments adversely since they could have only got 14% both respectively. It could have brought down the prices of petrol and diesel to nearly half of the prices as of now.
Also, the government could have imposed an additional cess on the diesel and petrol as it has done on the cars but the reason for the not imposing the same on diesel and petrol is the same that it would have still been less to what it is now and hence, the revenue generated would have been cut down
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