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Petrol price rises by Rs 36 per liter, diesel by 26.58 in less than 18 months

The rise in fuel prices has fueled inflation concerns as diesel is the primary fuel for transporting goods, including agricultural commodities.

Opposition parties like Congress criticize the government for the price increases and demand tax cuts.

Puri had said that while the center imposes a specific excise tax on gasoline and diesel that doesn’t change if the price of oil falls to $ 19 a barrel or rises to $ 84, state governments impose a sales tax rate that incidence increases with everyone increases hike.

He said the price of gasoline was lifted in 2010, effectively connecting it to world markets.

The Modi government exempted diesel prices from state controls in October 2014.

The Kerala Supreme Court proposed referring the inclusion of gasoline and diesel in the goods and services tax (GST) to the GST Council.

And when the Council considered at its Lucknow meeting last month, “State governments thought differently,” it said, referring to the panel’s decision not to include gasoline and diesel in the GST regime, which would have meant that the central consumption tax and the state value added tax would be subsumed into a single tax.

Finance Minister Nirmala Sitharaman had stated after the GST council meeting that the body had unanimously decided to keep petrol and diesel out of the GST regime.

The Council is chaired by the Minister of Finance of the Union and is composed of representatives from states and UTs.

Puri had also referred to the Rs 1.34 lakh crore oil bonds issued by the previous Congress-led UPA administration.

Though he didn’t associate them with current fuel prices, the bonds are one of the factors that BJP leaders blame for the rise in fuel prices.

Gasoline and diesel, as well as cooking gas and kerosene, were sold at subsidized prices during the previous Congress-led UPA administration.

Instead of paying for the subsidy to create parity between artificially suppressed retail sales prices and the cost, which had skyrocketed to over $ 100 a barrel due to international interest rates, the government at the time gave oil bonds totaling 1.34 million Rupees to state fuel retailers.

These oil bonds and the interest on them are now being paid.

Of the 1.34 billion rupees in oil bonds, only 3,500 billion rupees of the principal have been paid and the remaining 1.3 billion rupees are due for repayment between this fiscal year and 2025-26, according to the Treasury Department.

The government will have to repay Rs 10,000 crore this fiscal year (2021-22). An additional Rs 31,150 crore is due to be repaid in 2023-24, Rs 52,860.17 crore in the following year and Rs 36,913 crore in 2025-26.

However, the income from the excise tax increase far exceeds the amount to be paid to the oil companies.

Minister of State for Petroleum and Natural Gas, Rameswar Teli, told Parliament in July that the Union government’s tax levies on gasoline and diesel had increased 88 percent to 3.35 million rupees in the year ended March 31, from 1.78 million rupees a year ago are.

The excise duty collection in the 2018-19 pre-pandemic was Rs 2.13 lakh crore.

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