Excise move brings down VAT in Maha, Rajasthan, Kerala
Will lead to annual losses of ₹2,500 crore to state exchequer, says Maha ACS
NEW DELHI: The value-added tax on auto fuels in Maharashtra, Rajasthan and Kerala reduced on Sunday following a cut in excise duty by the central government, even as some states cited additional strain on revenues.
Though the Maharashtra government issued a statement on Sunday saying it reduced the VAT by ₹2.08 a litre on petrol and ₹1.44 a litre on diesel, it later clarified that “the reduction was reflected naturally because of the ad valorem system of taxation”.
“It will lead to annual losses of ₹2,500 crore to the state exchequer,” said Manoj Saunik, additional chief secretary, state’s finance department.
Union finance minister Nirmala Sitharaman on Saturday announced a record ₹8 per litre cut in excise duty on petrol and ₹6 a litre on diesel to rein in soaring fuel prices owing to a surge in international crude prices amid Russia’s war on Ukraine.
The minister also urged states to reduce VAT on petroleum products to give relief to the common man. “I wish to exhort all state governments, especially the states where reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man,” she said.
Post the November 2021 reduction in excise duty on petrol by ₹5 per litre and that on diesel by ₹10 a litre, 25 states and union territories cut VAT to give further reprieve to consumers battered by recordhigh retail prices. States ruled by parties not affiliated to the ruling National Democratic Alliance (NDA) at the Centre, such as Maharashtra, Andhra Pradesh and West Bengal, did not do so.
On Saturday, the Left Democratic Front government in Kerala promptly announced a cut in the state tax on the prices of petrol and diesel by ₹2.41 and ₹1.36 per litre, respectively.
Rajasthan chief minister Ashok Gehlot also said the state government will reduce VAT by ₹2.48 per litre on petrol and ₹1.16 per litre on diesel. However, the Tamil Nadu government led by Dravida Munnetra Kazhagam said it was neither fair nor reasonable to expect states to reduce taxes.