No plan to slap new cess on fuels: Thakur

by Jeremy

Economists at SBI in a report stated that retail prices of the two fuels could go down (by around 15-20% from the current levels) if the taxes on these are subsumed in Goods and Services Tax, due to the mitigation of cascading of taxes.

The Centre doesn’t intend to impose any new cess on petroleum products. Minister of state for finance Anurag Thakur told the Rajya Sabha on Tuesday, even as calls for a cut in fuel taxes have grown only shriller since prices of petrol and diesel hit record levels in February.

Economists at SBI in a report stated that retail prices of the two fuels could go down (by around 15-20% from the current levels), if the taxes on these are subsumed in Goods and Services Tax, due to the mitigation of cascading of taxes.

Asked if the government plans to bring petroleum products under the ambit of the goods and services tax (GST) regime, Thakur said any such move would require the GST Council’s recommendation. “So far, the GST Council has not made any recommendation for inclusion of petrol and diesel under GST,” he said.

The Centre levies a total tax — comprising basic excise, surcharge, agri-infra cess, and road/infra cess — of Rs 31.83/liter for diesel and Rs 32.98/liter on petrol. In March and May 2020, surcharge and cess on auto fuels increased by Rs 13/liter on petrol and Rs 16/liter on diesel.

As much as 60% of the retail price of petrol has crossed Rs 100-mark in some places in Rajasthan, Madhya Pradesh, and Maharashtra and is at an all-time high elsewhere in the country — it is made up of central and state taxes. Taxes make up for about 56% of the record-high retail diesel rates.

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