Dealers are now increasing their demand for fuel to be included under the scope of GST. The United Petroleum Front (UPF) has called for a nationwide strike on Friday, 13 October, to press for a number of demands that they have regarding fuel.
Introduced in India on 1 July 2017, the Goods and Services Tax (GST) is an indirect tax levied by the state and central government to replace multiple taxes and bring them all under a single head. Termed as the biggest tax reform since Independence, GST has taken over all good and services in the country, except a few, namely fuel. The purpose of GST is to make indirect tax simpler, replace the old tax regime and make many goods cheaper, however, petrol and diesel prices remain out of the purview of GST.
The reason for this is that if motor fuel falls under GST, the government stands to lose about 50% of its revenue from the product. Currently, the central excise duty on fuel is 23% and VAT levied by the state is 34%, which brings the tax on fuel to about 57%. If fuel steps into the realm of GST, the topmost slab is 28%, dropping the revenue earned by state and central government to 14% each. Both governments state that they cannot handle the loss of revenue.
UPF represents over 54,000 dealers from the All-India Petroleum Dealers Association, the Federation of All-India Petroleum Traders, and the Consortium of Indian Petroleum Dealers. Some of their demands are the inclusion of fuel under the ambit of GST, better terms for return on investment, revision of dealer margins every 6 months, resolution of transportation issues, resolution of ethanol blending and manpower issues, and the abolition of the zero tolerance policy of shortchanging customers. Dealers are also opposing the daily price regime that came into effect from 1 July stating that both parties, dealer and consumer, have not benefitted from it.
These demands have been long pending and now the United Petroleum Front (UPF) is taking a major step to press the government into meeting them. The UPF has also issued a warning that all motor fuel dealers will stop purchase and operations from 27 October if the government does not meet their demands. If more than 54,000 dealers all over India have agreed to keep their shutters down, the country is sure to feel the hit.