Published: Tue, September 11, 2018
Money | By Armando Alvarado

Fuel tax cut unlikely as Centre projects Rs 30,000 crore revenue hit

Fuel tax cut unlikely as Centre projects Rs 30,000 crore revenue hit

Fuel prices continue to soar and on Saturday, petrol price for the first time crossed the Rs 85 mark in the city. In Delhi, a litre of petrol will cost you Rs 80.50, while in Mumbai the situation is worse with Rs 87.89 per litre.

Higher prices of diesel, the fuel used in trucks, also threaten to push up inflation, which could in turn force the central bank to raise interest rates. Instead, more states are expected to reduce VAT, which will lower prices without impacting the Centre's tax collection.

Among the 29 Indian states and the union territory of Delhi, Kerala has the ninth highest sales tax and other state levies on petrol at 30.37 per cent; it is highest in Mumbai at 39.12 per cent (down from 48.98 per cent early this year).

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Through these graphics, the BJP contended that the percentage increase in the prices of petrol and diesel was higher during the UPA regime (2004-2014) than during the NDA one (2014-present).

However, many feel that by attributing the price hike only on global factors must be taken with a pinch of salt, the BJP government is trying to shrug away its own responsibility of bringing fuel prices under the ambit of the Goods and the Services Tax (GST). The Centre now levies a total excise duty of Rs 19.48 per litre of petrol and Rs 15.33 per litre on diesel. Nearly half of the retail selling price of petrol and diesel is made up of central and state taxes. According to a Financial Express report, the state-level value added tax (VAT)/sales tax is imposed ad valorem - which means a tax that is imposed in proportion to the value of goods. The tax ratio can be raised not by increasing rates but by bringing evaders and non-filers in tax net.

In the state capital, the IT campus at Technopark is functioning and the ISRO units are also working as normal. The extra benefit accrued to states is Rs 3-4 per litre, he said. "We have given income tax relief to the tune of Rs 98,000 crore and also Rs 80,000 crore on account of GST rate cuts on 334 commodities", he said. The official said the four states which have supported Bharat Bandh collect high taxes themselves. The reduction was carried out on May 31 in such a manner that the prices of both petrol and diesel will drop by a rupee.

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