Centre to slash fuel prices significantly? only one hurdle to overcome

NEW DELHI: The central government's decision to reduce the import tax on gold from 15 per cent to 6 per cent has come as a huge relief for people buying gold. As a result of the Centre's decision, gold prices have hugely dropped in the country. More than gold, fuel prices have a greater direct and indirect influence on the average person's daily life. A recent report claimed that the central government is considering slashing the exorbitant costs of petrol and diesel.

However, the decision in this regard is getting delayed as the states should also take a positive stand towards slashing the fuel rates. At present, fuel is taxed under Value Added Tax (VAT) in the country. Finance Minister Nirmala Sitharaman recently said that the central government has proposed to the states that GST (Goods and Services Tax) should be introduced instead of VAT.

"If the states fix the rate and all come together... and decide that GST will include petroleum products, then we can implement it immediately," Nirmala Sitharaman said.

Currently, consumers are paying two taxes on petroleum products as they are not included in GST. In addition to the taxes imposed by the state governments, they also have to pay excise duty to the central government. Fuel prices will significantly come down in every state and Union Territories if both these taxes are brought under the GST. This will be a great relief to the common man. However, Kerala and others did not accept this proposal earlier as it would result in a huge reduction in revenue for the states. With the Centre neglecting the states ruled by opposition parties in the union budget, the proposal is unlikely to be approved by the states.