Maharashtra, Gujarat cut Value-Added Tax on petrol and diesel

MK Stalin

In Maharashtra, petrol and diesel prices are trading near Rs 80 per litre and Rs 61 per litre by end of September 2017- which is at three year high. The total revenue from Value-Added Tax on petrol and diesel and the potential impact of the move on the state exchequer are being assessed. In addition, the state also charges cess at the rate of Rs 4 per litre and Rs 1.5 per litre on petrol and diesel respectively.

The App is developed by National Payments Corporation of India (NPCI), based on the Unified Payment Interface (UPI).

The VAT on petrol and diesel would be cut by 1 per cent to give relief to people, said chief minister Virbhadra Singh who presided over the cabinet meeting. Moreover, petroleum products are key inputs for many industries and since they are outside the ambit of GST, the user industries can not claim input tax credit (ITC) on a key raw material. This would specially be beneficial for oil marketing companies. The lowering of tax in poll-boundGujaratfollows Union Finance Minister Arun Jaitley recently writ - ing to all State Governments, nudging them to reduce taxes on petrol and diesel. This raises questions about feasibility of petrol and diesel under GST in the current fiscal.

Because of this move, the state government will suffer a loss of Rs 2,316 crore annually. "If the price of fuel has to be reduced further, then it will have to be done by the Centre", he said.

It is unlikely that the government would want to tinker with the recently implemented GST structure and introduce any slab higher than 28 percent.

This, too, has its own set of problems.

According to the report, the new rates are Rs 68.32 per litre ( down from from Rs 69.01) for petrol and Rs 56.32 (Rs 57.09) for diesel. This year, the government has already been forced to impose a cut on spending.

"Our demand for reduction in cess on petrol and diesel products by the State government was rejected and we were informed that it is utilised to repay farm loans waiver package announced in June", Daruwala said. Till such time the government manages to find an alternative source of revenue, it will continue to play "heads I win, tails you lose" with the consumer.

Related News: