The current spurt in fuel prices is due to two factors: free fall in Indian rupee’s value in the international currency market and the volatility in international prices of crude.47 a litre. However, states are reluctant to let go of their right to tax petrol and diesel. But now when international crude oil prices are rising and the rupee is falling, consumers have to bear the burden. Rising oil prices could cause significant inflation, dampen economic growth and alter geopolitics in multiple ways this year.States, especially Kerala, pointed out that with everything being brought under GST, states’ options to raise resources have come down. The rupee has now depreciated over 6 per cent since June 2018.12 per cent on petrol, while Telangana levies the highest VAT of 26 per cent on diesel.Since the UPA-2 days, oil producing countries have tried to bring down their production to jack up crude oil prices and geopolitical tension has made things worse. This week the rupee fell to a new low of 71 against US dollar. India meets over 80 per cent of it’s fuel demand through imports so prices are largely dependent on external factors and taxes by Centre and state governments. Besides, the states also impose high rate of taxes on fuel that vary from one state to another.US sanctions against Iran, the third biggest exporter of oil to India, make it difficult for its allies like India to manage the oil demand supply.24 per cent on diesel.The lowest tax on fuel is charged in Andaman and Nicobar Islands where a 6 per cent sales tax is collected on both the fuels.33 a litre.77 per litre and that on diesel by Rs 13.48 per litre and on diesel by Rs 15. Crude oil prices were hovering around $76. In all, building block flat twin screw barrel duty on petrol was hiked by Rs 11.

Opposition parties have also announced nation-wide strikes and protests over the record-high fuel prices.Excise duty on petrol is currently at Rs 19.However, the Centre currently does not want to reduce taxes on fuel as this might hit its revenue. This depreciation of rupee against the dollar has made import of crude oil costlier. However, in October 2017, the Centre had reduced basic excise duty on petrol and diesel by just Rs 2 per litre.It seems consumers will have to bear high fuel prices until political pressure forces governments to reduce taxes on fuel, work out some alternative mechanism for oil prices or external factors improve.During the last GST Council meeting not a single state agreed to include petrol and diesel in the GST list as they wanted some scope for manoeuvring taxes to raise funds during crisis. However, when crude oil prices were falling the Modi government started hiking taxes on petrol and diesel to increase its tax kitty.. the government seems to be looking away and pointing towards global issues.With Assembly elections scheduled in four important states including Madhya Pradesh and Rajasthan soon, the Centre is under pressure to intervene and offer relief to people.

So consumers in India did not really benefit from lower global prices. The total tax incidence on petrol comes to 45-50 per cent and on diesel, it is around 35-40 per cent. Petrol and diesel prices are spiralling out of control. In initial years of the Modi government, the crude prices had fallen to below $40 a barrel against high of $120 per barrel witnessed during UPA 2.Oil minister Dharmendra Pradhan has suggested bringing petrol and diesel under GST to bring down taxes on diesel and petrol to give relief to consumers. But as fuel prices continue to pinch consumers, the question remains — Have we done enough to tackle the crisis?Petrol and diesel prices are on a fire again, hitting farmers, transporters, fishermen, consumers and commuters. Between November 2014 and January 2016, Centre had raised excise duty on petrol and diesel on nine occasions to take away most gains arising from plummeting international oil prices. Besides, finance ministry officials thinks that while a Rs 2-3 cut in tax may not provide a large benefit to general public, it will have an adverse impact on revenue. In its earlier years, the Narendra Modi government benefited from a low global crude oil prices due to excess crude inventory world-wide. Delhi charges a VAT of 27 per cent on petrol and 17.

Taxes from GST have not been as per expectation and shortfall in taxes could hit government’s fiscal deficit target of 3. Due to geopolitical factors international crude oil prices are also volatile.India deregulated the price of petrol in 2010 and that of diesel in 2014, ending government’s control over fuel prices that are now decided depending upon the price of crude oil in international market. Mumbai has the highest VAT of 39.16 a barrel on Friday. So, every time there is an increase in crude prices public sector oil marketing companies pass on the hike in to consumers, on a daily basis.3 per cent of the GDP. They said that products that are outside GST’s purview should remain so