Lok Sabha Question No. 810 (UNSTARRED), answered on 2018-07-23
Subject: GST on Petroleum Products
Ministry: PETROLEUM AND NATURAL GAS
Asked by: M. B. RAJESH, HARISH CHANDRA MEENA, JYOTIRADITYA MADHAVRAO SCINDIA, ANJU BALA, Tejpratap Singh,Yadav, RAJU ALIAS DEVAPPA ANNA SHETTI, BOORA NARSAIAH GOUD, RANJANBEN BHATT, KONAKALLA NARAYANA RAO, K. C. VENUGOPAL, FAIZAL P.P. MOHAMMED

## GOVERNMENT OF INDIA LOK SABHA UNSTARRED QUESTION NO.810 TO BE ANSWERED ON 23 rd  JULY, 2018

## GST on Petroleum Products

810. SHRI M.B. RAJESH: SHRI HARISH MEENA: SHRI JYOTIRADITYA M. SCINDIA: SHRIMATI ANJU BALA: SHRI TEJ PRATAP SINGH YADAV: SHRI RAJU SHETTY: DR. BOORA NARSAIAH GOUD: SHRIMATI RANJANBEN BHATT: SHRI KONAKALLA NARAYANA RAO: SHRI K.C. VENUGOPAL: MOHAMMED FAIZAL:

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)  whether  the  Government  proposes  to  introduce  Goods  and  Services  Tax  (GST)  on  petroleum products  and  if  so,  the  details  thereof  along  with  any  consultation  with  petroleum  companies/State Governments and the Ministry of Finance made in this regard;
- (b)  whether  petroleum  companies  have  raised  objection/concerns  that  since  only  certain  petroleum products have been included under GST they have to comply with both old and new tax regimes and if so, the details thereof and the reaction of the Government thereto;
- (c) whether there would be increase in input cost of petroleum companies once GST is implemented and they are likely to incur collective loss to the tune of 25000 crore annually and if so, the details thereof;
- (d)whether the Government/State Governments propose to reduce taxes/excise duty on petrol, diesel and other petroleum products and if so, the details thereof along with the steps taken to implement the said proposal and provide relief to the common people;
- (e) the number of times the prices of petrol and diesel has increased and reached at highest level during the  last  four  years  and  number  of  times  the  prices  of  petroleum  products  changed  during  the  said period, product-wise despite declining of crude oil prices in the international market along with steps taken to reduce the prices of petroleum products and shelving the review of petrol and diesel rates on daily basis, product-wise;
- (f) the exact price per litre of petroleum products i.e. petrol, diesel and petroleum products imported from producing country along with the processing expenditure incurred on these products and the State and Union Government taxes imposed on the said products; and
- (g) whether the factor responsible for fuel price rise in the past few months has been examined in depth and if so, the details thereof along with the steps taken to formulate long term policy to fix the prices of petroleum products?

## ANSWER

## MINISTER OF MINISTRY OF PETROLEUM & NATURAL GAS (SHRI DHARMENDRA PRADHAN)

(a) to (c)  : Article 279A (5) of the Constitution provides that Goods and Services Tax Council shall  recommend the date on which  goods and services tax shall be levied  on petroleum  crude,  high  speed  diesel,  motor  spirit,  natural  gas  and  aviation  turbine  fuel. Thus  while,  petroleum  products  are  constitutionally  included  under  GST,  the  date  on which GST shall be levied on such goods shall be as per the decision of the GST Council, which  has  representation  of  Ministers-in-charge  of  Finance  or  Taxation  or  any  other Ministers nominated by each of the States and Union Territories with Legislature.

The oil  and  gas  sector  has  a  hybrid  tax  regime  on  account  of  being  subject  to  levy  of existing taxes i.e. excise duty and State sales tax for Petrol, Diesel, ATF, crude oil and Natural Gas and GST for the remaining petroleum products. Ministry of Petroleum and Natural Gas has taken up the concerns of stakeholders arising out of non-availability of input tax credit in respect of non-GST items with Ministry of Finance for their inclusion under GST.

(d)  To reduce the retail selling prices of petrol and diesel, the Government has reduced the Central excise duty on petrol and diesel by ₹ 2 per litre effective from 4th October, 2017.  The  Government  continues  to  modulate  the  effective  prices  to  consumers  for subsidized  domestic  LPG  and  Retail  Selling  Price  of  PDS  kerosene.    The  Central Government has also requested the State Governments to reduce VAT imposed by them on  petrol  and  diesel  to  give  further  relief  to  the  consumers.  Accordingly,  five  State Governments and one Union Territory have reduced the VAT on petrol and diesel.

(e)   Public Sector OMCs have implemented daily revision of retail selling price of petrol and diesel in the entire country with effect from 16th June, 2017.  Daily price revisions of petrol and diesel make the retail prices more reflective of the current market conditions, minimizing the volatility in the retail selling price of petrol and diesel. Also, it leads to increased  transparency  in  the  system  and  enables  smoother  flow  of  products  from refinery/depots  to  Retail  Outlets.  The  retail  selling  price  of  petrol  and  diesel  since 01.04.2014, against the dates indicated in the table is given at Annexure-I.

(f)        Refining  of  crude  oil  is  a  process  industry,  where  crude  oil  is  processed  through several processing units.  Each of these units produces intermediate product streams which results in difficulty in apportioning the total cost of individual refined product.  Therefore, individual product-wise costs are not identified separately.

At present, the Central Excise duty on petrol and diesel is ₹ .  19.48 per litre and ₹ 15.33 per litre respectively. The State wise effective rates of taxes on petrol and diesel as on 01.07.2018 is given at Annexure-II.

(g)      The  prices  of  petrol  and  diesel  have  been  made  market-determined  by  the Government  with  effect  from  26.06.2010  and  19.10.2014  respectively.  Since  then,  the Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel in line with international product prices and other market conditions.

***

Annexure-1 Annexure referred to in reply to part (e) of the Lok Sabha Unstarred Question No.810 to be answered on 23 rd July, 2018 regarding 'GST on petroleum products'.

## RSP of Petrol and Diesel

| Date       | Petrol      | Diesel      |
|------------|-------------|-------------|
|            | ( ₹ /litre) | ( ₹ /litre) |
| 01.04.2014 | 72.26       | 55.49       |
| 01.07.2014 | 73.60       | 57.84       |
| 01.10.2014 | 67.86       | 58.97       |
| 01.01.2015 | 61.33       | 50.51       |
| 01.04.2015 | 60.49       | 49.71       |
| 01.07.2015 | 66.62       | 50.22       |
| 01.10.2015 | 61.20       | 44.95       |
| 01.01.2016 | 59.35       | 45.03       |
| 01.04.2016 | 59.68       | 48.33       |
| 01.07.2016 | 64.76       | 54.70       |
| 01.10.2016 | 64.58       | 52.51       |
| 01.01.2017 | 68.94       | 56.68       |
| 01.04.2017 | 66.29       | 55.61       |
| 01.07.2017 | 63.09       | 53.33       |
| 01.10.2017 | 69.22       | 58.40       |
| 01.01.2018 | 69.97       | 59.70       |
| 01.04.2018 | 73.73       | 64.58       |
| 01.07.2018 | 75.55       | 67.38       |

Note

- The above prices are of Delhi.

## Annexure referred to in reply to part (f) of the Lok Sabha Unstarred Question No.810 to be answered on 23 rd July, 2018 regarding 'GST on petroleum products'.

## State wise rates of taxes on Petrol and Diesel as on 01.07.2018

| State/UT                                 | As on 01.07.2018 (%)   | As on 01.07.2018 (%)   |
|------------------------------------------|------------------------|------------------------|
| State/UT                                 | Petrol                 | Diesel                 |
| Andhra Pradesh                           | 35.99                  | 28.36                  |
| Arunachal Pradesh                        | 20.00                  | 12.50                  |
| Assam                                    | 30.84                  | 22.75                  |
| Bihar                                    | 24.66                  | 18.31                  |
| Chattisgarh                              | 26.96                  | 25.77                  |
| Delhi                                    | 27.00                  | 17.26                  |
| Goa                                      | 16.63                  | 18.85                  |
| Gujarat                                  | 25.44                  | 25.54                  |
| Haryana                                  | 26.25                  | 17.22                  |
| Himachal Pradesh                         | 24.38                  | 14.36                  |
| Jammu &Kashmir                           | 27.51                  | 17.07                  |
| Jharkhand                                | 26.80                  | 23.27                  |
| Karnataka                                | 28.34                  | 18.28                  |
| Kerala                                   | 30.38                  | 23.85                  |
| Madhya Pradesh                           | 36.05                  | 23.22                  |
| Maharashtra - Mumbai, Thane &Navi Mumbai | 39.69                  | 24.82                  |
| Maharashtra (Rest of State)              | 38.68                  | 21.93                  |
| Manipur                                  | 23.62                  | 13.95                  |
| Meghalaya                                | 22.44                  | 13.77                  |
| Mizoram                                  | 18.84                  | 11.52                  |
| Nagaland                                 | 23.16                  | 13.58                  |
| Odisha                                   | 24.57                  | 25.00                  |
| Punjab                                   | 35.29                  | 16.83                  |
| Rajasthan                                | 30.84                  | 24.19                  |
| Sikkim                                   | 28.01                  | 15.87                  |
| Tamil Nadu                               | 32.10                  | 24.04                  |
| Telangana                                | 33.25                  | 25.97                  |
| Tripura                                  | 18.91                  | 12.99                  |
| Uttarakhand                              | 28.30                  | 16.79                  |
| Uttar Pradesh                            | 27.99                  | 16.81                  |
| West Bengal                              | 25.27                  | 17.56                  |
| Union Territories                        |                        |                        |
| Andaman &Nicobar Islands                 | 6.00                   | 6.00                   |
| Chandigarh                               | 19.76                  | 11.42                  |
| Dadra &Nagar Haveli                      | 20.00                  | 15.00                  |
| Daman &Diu                               | 20.00                  | 15.00                  |
| Lakshadweep                              | -                      | -                      |
| Puducherry                               | 21.15                  | 17.15                  |

Source: PPAC

Notes: 1. Taxes considered for computing effective tax rate includes Sales tax ,VAT, Cess,  Additional tax & Surcharge etc. which are recoverable in price as taxes excluding Central levies & CST.

2. In addition to the above taxes, State Governments of Bihar and West Bengal, levies additional tax/surcharge on VAT @ 30%/20% respectively which is irrecoverable in nature.

3. Effective rate of tax has been worked out based on the % of total taxes (taxes as per note 1 above) to retail selling prices excluding these total taxes.