Everything About GST Rate on Petrol and Diesel in India


October 7, 2019

GST on Petrol and Diesel

GST on Petrol and Diesel is a cold-sweat issue for Central and State Government. None of the two seem to desire to include Petrol and Diesel in the GST ambit.

GST regime was rolled in with the objective of “One Nation One Tax “ in July 2017. At that time five petroleum products— diesel, petrol, natural gas, crude oil, and aviation turbine fuel—were kept out of the GST sphere which continued to remain out till date. Neither does it seem to arrive under the purview of Goods and Services Tax (GST) in the near future as the government will have to face a hefty revenue loss.

Although the discussions were held among big industrialists and some ministers including Dharmendra Pradhan and Nitin Gadkari, regarding GST on petrol and diesel to deal with the price flexibility of crude, it doesn’t seem to have any prospectus to levy GST on petrol and diesel. The Union finance ministry as well did not announce any proposal for GST rate on petrol and diesel after when the same issue was deliberately discussed in GST council meeting on 4 August.

Recommended Post: GST Impact on Petroleum Products in India

Neither the central government Nor any of the state government advocates the inclusion of Petrol and diesel under the Goods and Services Tax (GST) rate slabs. This is because if these two fuels are kept under GST, the Centre will have to relinquish ₹20,000 crore input tax credit which currently contributes into the central revenue when petrol, diesel, natural gas, jet fuel and crude oil are out of GST.

As far as the States are concerned, they wish to preserve a revenue puddle to instantly deal with any contingency like the recent floods in Kerala in a better way.

At present, the Centre charges an exercise duty of ₹19.48 and ₹15.33 per litre on petrol and diesel respectively and the states levy value-added tax (VAT). 6% is the lowest VAT, charged by Andaman and Nicobar Islands on petrol and diesel as well. Whereas 39.12% is the highest VAT levied by Mumbai on petrol and  26% is the highest VAT levied by Telangana on diesel.

Under GST, the total tax on a specific good or service has been fixed at an akin level as the sum total of central and state taxes were applicable prior to 1st July 2017,  by keeping them into one of the four GST tax brackets of 5%, 12%, 18% and 28%.

Also Read: GST Impact on Oil and Gas Sector

On 29 May, the rate of petrol and diesel soared to the crest at  ₹78.43 and ₹69.31, the highest till today. However, the rates dropped down slightly during the subsequent period as a consequence of mollification in oil prices at international font and strengthening of rupee against the US dollar.

At present, the cost of Petrol and Diesel in Delhi is ₹77.49 and ₹69.04 respectively. The VAT is leviable at 27% on petrol and 17.24% on diesel in Delhi.


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