‘DUTY CUTS WON’T IMPACT STATES SHARE’
New Delhi, May 22: Finance minister Nirmala Sitharaman on Sunday rebutted the opposition's criticism of excise duty cut impacting the share of states in central taxes, saying the Rs 8 a litre cut in petrol and Rs 6 reduction in diesel have been done in road and infrastructure cess levied on the two fuels, collection on which was never shared with states.
First, former union finance minister P. Chidambaram and then other opposition leaders stated that Saturday’s reduction in excise duty would reduce the share of states in central taxes.
Chidambaram on Sun-day retracted his statement saying the cut in the levies accrues to the Centre alone.
Taking to Twitter, Sitharaman said she is sharing some useful facts on levies on petrol and diesel for the benefit of all. "Basic Excise Duty (BED), Special Addition-al Excise duty (SAED), Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. Basic ED is sharable with states. SAED, RIC & AIDC are nonsharable," she said.
The excise duty reduction of Rs 8 per litre on petrol and Rs 6 a litre on diesel has entirely been made in RIC. This was the case even in November 2021 when tax on petrol was cut by Rs 5 and that on diesel by Rs 10, she said.
As per the Centre-state tax sharing formula, 41 per cent of taxes collected by the Centre go to states. These however do not include collections from levy of cess. Most of the tax on petrol and diesel is
made up of cess.
While total incidence of central tax on petrol prior to Saturday's cut was Rs
27.90 per litre, BED was only Rs 1.40 a litre. Similarly, out of Rs 21.80 a litre total central tax on diesel, BED was only Rs
1.80. SAED of Rs 11 a litre on petrol and Rs 8 per litre on diesel was levied. A Rs
2.50 a litre AIDC was levied on petrol and Rs 4 per litre on diesel.
Petrol commanded Rs 13 a litre additional excise duty in form of RIC and Rs
8 of such tax was levied on per litre of diesel. This has been cut in Saturday's excise reduction. Only Rs 1.40 per litre BED collected on petrol and Rs 1.80 on diesel are shared with states. The SAED, AIDC and RIC are not shared.
"The duty reduction made yesterday has an implication of Rs 1,00,000 cr a year for Centre. The duty reduction made in November'21 has an implication of Rs 1,20,000 cr a year,” she said.