Economy

Dharmendra urges States to slash Value-Added Tax on Petrol, Diesel

Dharmendra urges States to slash Value-Added Tax on Petrol, Diesel”

"The Finance Minister will soon be writing to all the states on slashing VAT levied on petrol and diesel", he added.

AFTER the Centre taking a hit of Rs 26,000 crore by cutting Excise Duty on oil, Finance Minister Arun Jaitley on Wednesday nudged States to cut Sales Tax or VAT on petrol and diesel to provide further relief to consumers from high fuel prices.

Talking to reporters here, finance minister Dr. Thomas Isaac has said that the Kerala government will not reduce the tax on petrol and diesel as per the orders of the Centre.

"We urge states to take responsibility just like the Centre did, in the direction of consumer interest".

Under all round attack on rising fuel prices, the government on Tuesday chose to slash the excise duty on petrol and diesel by Rs 2 per litre, effective from Wednesday, to cushion the impact of rise in global crude prices, in a decision that will cost the exchequer Rs 13,000 crore during the remaining part of the fiscal.

"States are the biggest beneficiaries".

TS officials say, the reduction in fuel prices by over Rs 2 per litre due to excise duty cut by Centre on Tuesday would alone cause around Rs 3,000 crore loss to TS as it imposes Value-Added Tax on total price and it can not afford to lose revenue further by reducing Value-Added Tax on fuel as GST already caused over Rs 400 crore loss in the first month.

"Economic growth can aid in recovering revenue losses because of the excise duty cut on oil", Jaitley said. The recent reduction in petrol and diesel prices could potentially reduce the CPI inflation by around 20-21 basis points directly and the indirect impact might be higher.

Expenditure on petrol and diesel has 6.84 percent weight in the CPI (consumer price index) basket.



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