Petroleum Dealers demand for GST Tax Regime

Petroleum dealers in the state have asked the central and state governments to implement the Goods and Services Tax (GST) or any unified tax structure throughout the country.

These comes after a peaceful demonstration in Delhi a few days ago by a group of dealers from several states in North India demanding these and other things.

The demand for uniform taxation stems from the belief that it would reduce the need for customers living near state boundaries to go to neighbouring states to purchase petrol. Currently, changes in Value Added Tax (VAT) rates contribute to fluctuating fuel costs. Implementing consistent taxes would reduce this problem, benefiting both customers and merchants located near state lines.

An rise in dealer margins has been another long-pending demand. According to the Apoorva Chandra Committee’s 2016 report, a dealer must sell 170 kilo litres each month in order to break even. According to estimates, such a dealer would get paid Rs.27,500 per month, plus 5 paise per litre on diesel and 7 paise per litre on petrol, for a total of Rs.6,377 per month.

Dealers say that the 34 paise per litre allocated as operational charges does not cover all of their expenditures. This sum does not include other expenditures such as internet fees, local government taxes, fire fighting equipment, point of sale machine expenses, and internet charges. This is especially important for dealers that sell fewer than 110 kilo litres per month.

A low-volume dealer gave the example of raising staff compensation over time but without boosting profit margins. Despite Apoorva Chandra Committee recommendations to modify margins every six months, the competitive market and the expanding number of retail outlets, which now stands at roughly 86,000 countrywide, provide hurdles to sustaining company growth.

There are roughly 6,500 retail locations in Tamil Nadu alone that sell fuel provided by state-run oil marketing corporations. The problems experienced by low-volume dealers are exacerbated by dealer competition and the opening of additional stores in close proximity.

The petroleum dealers’ call for uniform taxes and higher profit margins highlights the constraints and complexities of India’s fuel retail market.