GST on petrol has been a contentious issue since the implementation of the Goods and Services Tax (GST) law in India. Certain developments since 2021 have led industries across the country to believe that the GST Council may decide to charge GST on petrol and petroleum products. In the 53rd GST Council meeting press conference, the FM Smt. Nirmala Sitharaman mentioned that it is the intent of the Central Government to bring petrol and diesel under GST, however it can be made a reality only once the states agree to the move.
What is GST on petrol?
With the implementation of GST, many ask questions such as ‘Is GST applicable on petrol?’ and ‘How much GST on petrol in India?’. However, there is no GST being levied on petrol at present. The tax on petrol varies with every state/UT. There is an imposition of central excise duty on the base price and state VAT on the dealer’s commission.
Section 9 of the CGST Act states that GST on petrol crude and diesel, GST on motor spirit, natural gas and aviation turbine fuel shall apply from a date that government will notify. The government has not notified any date for levying GST on petroleum products. Further, Article 279A of the Indian Constitution mentions that the GST Council shall have the authority to decide the date of implementing GST on petrol in India.
From all the discussions between the Centre and states at the GST Council meetings so far, a maximum GST rate of 28% could be levied on petrol along with cess.
GST on Fuel and Petroleum Products
| Particulars | HSN code | GST rate |
|---|---|---|
| Petroleum Gases in liquified form | 27111900 | 5% |
| Petroleum Gases in gaseous state | 27112100 | 18% |
| Petroleum Oils And Oils Obtained From Bituminous Minerals, Other Than Crude, with the weight of 70% or more of Petroleum Oils | 27109100 | 18% |
| Raw petroleum coke for node making used in the Aluminium Industry as per Standard Is 17049 | 27131110 | 18% |
| Liquified petroleum gas or LPG supplied to non-domestic, exempted category (NDEC) customers by companies such as IOC, HP or BP | 27111200 | 5% |
| Petroleum jelly | 27129010, 90 | 18% |
Benefits of GST on Petrol
| Present Day under excise and VAT | Possible future under GST | ||
|---|---|---|---|
| Particulars | Amount (Rs.) per litre | Particulars | Amount (Rs.) per litre |
| A. Fuel cost (Petrol) (Including freight) | 57.35 | A. Fuel cost (Petrol) (Including freight) | 57.35 |
| B. Excise duty (19.90/litre) | 19.9 | B. Dealer commission per litre | 3.87 |
| C. Dealer’s commission per litre | 3.87 | C. Total value (A+B) | 61.22 |
| D. Total value (A+B+C) | 81.12 | GST (assumed and taken highest slab of 28% on C) | 17.14 |
| VAT (Delhi) @ 19.4% on D | 15.74 | ||
| Retail price of petrol (RSP) | 96.86 | Retail price of petrol (RSP) | 78.36 |
FAQs
Q1. How much is GST on fuel?
GST on fuel, assuming Aviation Turbine Fuels fall under HSN code 27101939 attract 5% GST.
Q2. What is GST on the transportation of petroleum products?
Transportation of natural gas using a pipeline will attract a 5% GST rate without input tax credits or a 12% GST rate with a full claim of the input tax credit. Regarding the transportation of petrol, the taxpayer must pay tax on a reverse charge basis for the transportation of non-GST goods if a Goods Transport Agency (GTA) service is being used. The standard GST rate of 5 or 12% or 18% would apply depending on the scenarios and mode of transportation.
Q3. What is GST on petrol in Maharashtra?
Currently, VAT is being charged on the sale of petrol in Maharashtra or any other state.
Q4. Is there any GST notification on petroleum products?
No, there are no GST notifications issued so far on petroleum products. The GST Council is yet to take any decision on imposing GST on petrol and diesel, or other petroleum products.
Q5. How much is GST on oil?
GST on petroleum oil, extracted from bituminous minerals, currently attracts an 18% rate.
