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How will the GST on gasoline and diesel impact consumers?


The 45th Goods and Services Tax (GST) Council, which includes the Central and the States, meets today in Lucknow. This meeting is very important to know how the consumer can relieve himself from the ever increasing prices of gasoline and diesel. The question is whether gasoline and diesel will be subject to the scope of the Goods and Services Tax (GST).

The GST Council meeting is expected to decide on the introduction of gasoline and diesel within the scope of the indirect tax and the reduction of taxes on COVID-19 drugs. After December 18, 2019, this is the first ground meeting of the GST Council. Recently, all GST Council meetings were held in virtual mode due to the ongoing COVID-19 pandemic.

Previously, the Kerala High Court ordered on June 21 that gasoline and diesel be included in the GST, as fuel prices have crossed the 100 rupee mark this year in some places. Looking at the record price of fuel, the court said the GST Council should consider subjecting gasoline and diesel to the GST.

Five commodities, including crude oil, natural gas, gasoline, diesel, and aviation turbine fuel (ATF), have been excluded from the scope of the GST since the introduction of the GST in July 2017. This was done in view of the dependence of central and state government revenues on the tax imposed on them.

2021 GST Council Meeting Agenda

The meeting is likely to discuss the levying of GST on crude oil, high speed diesel, gasoline, natural gas and aviation turbine fuel (ATF).

The Council will likely discuss extending the reduction in the GST rate from 12% to 5% on four important drugs required for the treatment of COVID-19.

This includes tocilizumab, amphotericin B, remdesivir, and blood thinners such as heparin until December 31. Currently, it is valid until September 30.

GST compensation of Rs 1 13,000 crore has been paid to states since April 2020, but this is not enough to cover the full amount expected by states.

This is due to the impact of the COVID-19 pandemic on the Goods and Services Tax (GST) and the collection of the GST.

The GST Council is likely to discuss the treatment of food delivery services, including take-out and home delivery services, as “food services”.

All “food services” can charge five percent GST, according to sources cited by a media website.

Impact on consumers

Removing tax inefficiencies is likely to benefit consumers and make businesses more competitive.

Sensitive automotive fuels are heavily taxed by central and state governments. Submitting them to the GST could reduce the tax burden.

If the GST board decides to cover fuel prices under its regime, then there will be a maximum tax of 28% on the base price nationwide.

This means that the various excises and VAT that the Center and the States levy on fuel prices will be replaced by a uniform GST rate across the country.

Given the dependence of central and state government revenues on the tax levied on gasoline sales, this will be a difficult call for the GST Council.

The tax breaks on drugs for the COVID-19 cure will be a big relief as people are already burdened with huge medical expenses due to the pandemic.

The proposal to treat food delivery apps like Zomato and Swiggy like restaurants would affect the common man.

This means that ordering food online will become more expensive if a five percent GST is charged.


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