In a move that could potentially alter the pricing structure of petrol and diesel across India, the Madras High Court has directed the Union government to respond to a petition seeking to bring these fuels under the Goods and Services Tax (GST) regime. The court has granted the Centre four weeks to submit its response, as per reports.The petition argues that including petrol and diesel under GST would significantly reduce their retail prices, bringing relief to consumers burdened by fluctuating fuel costs. At present, these fuels are subject to a combination of central excise duty and state-specific taxes, leading to varying prices across the country.
The BJP-led Union government has previously hinted at its willingness to bring petrol and diesel under the GST framework, which would ensure uniform tax rates across the country. Such a move would likely lead to a decrease in prices as GST would replace the current multiple taxes levied by the Centre and individual states.
However, several state governments, particularly those run by opposition parties, have expressed strong opposition to the idea. Petrol and diesel are significant sources of revenue for the states, and bringing them under GST would mean a considerable reduction in state earnings. States like Tamil Nadu and West Bengal have been vocal in opposing the move, citing concerns over revenue loss.
The federal structure of GST allows states to levy taxes on fuel outside the purview of the common tax regime, which is why state governments have retained this power despite the rollout of GST in 2017.
This is not the first time a court has weighed in on the matter. The Kerala High Court had earlier directed the Centre to consider a similar plea regarding the inclusion of petrol and diesel under GST. However, progress has been slow due to the lack of consensus between the Centre and the states.
If the fuels are brought under GST, consumers could see a reduction in petrol and diesel prices. Under the current system, the tax burden on fuels is often more than 100%, with excise duties and VAT pushing prices up. Under GST, the highest tax slab is 28%, which would significantly reduce the cost if fuels are taxed at this rate.
While the central government has shown interest in the move, the resistance from states remains a major hurdle. As the Madras High Court awaits the Centre’s response, the debate over bringing petrol and diesel under GST continues to fuel both economic and political discussions across the country.