New Delhi, April 27 ,2022: Targeting Opposition-ruled States for high fuel prices, Prime Minister Narendra Modi on Wednesday asked them to reduce value added tax (VAT) on petrol and diesel as it amounts to “injustice to the people”.
“I am not criticising anyone, just discussing,” said the PM while listing out the States that did not reduce VAT on fuel during the steep hike when the Centre had done its bit by cutting excising duty.
“For some reason, States like Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala and Jharkhand did not agree to slash VAT on fuel. The burden of high prices continued to be on the citizen,” he said in a virtual interaction with Chief Ministers. These States that have not cut VAT have earned an extra ₹11,945 crore as compared to States that cut rates.
The Centre had reduced the tax on fuel prices in November 2021. The Prime Minister underlined that the effect has not been passed on to the common citizen because some State governments did not cut VAT. The PM listed the fuel prices in cities across the country and flagged higher rates in Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu. The price of petrol across these States are hovering between ₹115 per litre and ₹120 per litre. As against this, the BJP-ruled States, which had reduced tax, have seen petrol prices hover around ₹102-106 over the last few days.
Excise duty cut
“In order to reduce the load of petrol and diesel prices, the Central government has reduced the excise duty and had requested the States also to reduce taxes. Some States reduced taxes but some States did not pass on the benefits to the people, leading higher cost of petrol and diesel there. This is not only injustice towards the people of the State but harms the neighbouring States also,” PM Modi said.
According to him, Karnataka and Gujarat undertook the tax reduction for the welfare of the people despite revenue loss (of around ₹3,500-5,000 crore) while their neighbouring States earned revenue by not reducing tax, of around ₹5,000 crore.
The PM said 42 per cent of the revenue at Centre goes to State governments.
He said just as India strongly fought a long battle against Covid, the same must be done for economic issues given the impact of global issues like the ongoing “war-like situation”.
