Many wonder if petrol and diesel will get more cheaper if the government imposes GST on it amid the third rise in fuel prices this month.
Published: May 23, 2026 5:55 PM IST
Petrol and diesel prices have increased for the third time in a month amid fears of inflation within the middle class. This comes after Prime Minister Narendra Modi appealed to the citizens to conserve fuel, indicating that oil prices would rise in the coming days, along with Union Petroleum Minister Hardeep Singh Puri stating that it would be impossible for the government to stop oil companies, which have been incurring losses of Rs 1,000 crore per day, from raising prices.
But one of the biggest questions remains how much the public will gain if Goods and Services Tax is levied on petrol and diesel like other products? Here is all you need to know.
What is the tax burden on the fuel currently?
To understand the impact of GST on petrol and diesel prices, it is necessary to first examine the existing tax structure on both fuels. On May 23, petrol in Delhi was priced at Rs 99.51 per litre. The actual cost of petrol was Rs 66.29, but after adding Rs 11.90 as central excise duty, Rs 16.03 as Delhi government VAT, and a dealer commission of Rs 4.42 per litre, the retail price increased significantly.
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Meanwhile, diesel is currently taxed more heavily than petrol. Diesel in Delhi currently costs Rs 92.49 per litre, although its actual base price is Rs 67.36. The increase comes after adding Rs 7.80 as central excise duty, Rs 13.39 as Delhi government VAT, and a dealer commission of Rs 3.03 per litre.
What is the current total tax on petrol and diesel?
At present, petrol and diesel are subject to three different taxes and charges. Combined, these impose a tax burden of about 42 per cent on petrol and 32 per cent on diesel, pushing up retail prices considerably. This is why fuel prices rise sharply between the refinery and the market. To address this issue, trade organisations have been calling for petroleum products to be included under GST.
Benefit of levying an 18 per cent GST
The impact of bringing petrol and diesel under GST can be estimated using the existing GST rates. Petrol’s base price in Delhi currently stands at Rs 66.29 per litre. If it were taxed at 18 per cent GST, the tax amount would be Rs 11.93, resulting in a final price of roughly Rs 78.22 per litre.
