Jaitley urges States to cut VAT on petrol, diesel

Source: The Hitavada      Date: 05 Oct 2017 08:32:47



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.

Jaitley, who is here on three-day official visit, said that the Rs 2 per litre cut in Excise Duty on petrol and diesel was done to give relief from relentless increase in prices and leave more money in hands of consumers. “Now it is up to State Governments if they are concerned with the issue (to cut Sales Tax or VAT),” he told reporters here.

Referring to Opposition ruled States, he said, some State Governments, particularly in Kerala and Delhi, were at the forefront of demanding a cut in duties.

“And therefore State Governments must really look at their own VAT collections,” he said. Jaitley said, a large part of taxes collected on petroleum products goes to states. Besides their own VAT collection, they also get 42 per cent of Central Duties. And so States must also bear a part of the impact, he said, adding that the revenues of both the Centre and State Governments would be impacted by duty cuts but an upward movement in the economy would give adequate space for covering up of the lost revenue. “When global oil prices are high, there is some kind of cushion required to be provided as far as consumers are concerned. Therefore, we have taken a conscious decision to that effect,” he said.

Asked if BJP-ruled States would also be nudged to cut VAT, he said, “I think the States manage their finances and I am sure states are also close to their own people.” States that levy VAT as high as 40 per cent will “adequately factor this concern in,” he said.

BJP-ruled Maharashtra levies 46.52 per cent VAT (47.64 per cent in Mumbai) on petrol, the highest in the country. Andhra Pradesh has 38.82 per cent VAT on petrol while BJP- governed Madhya Pradesh levies 38.79 per cent VAT on the fuel.