Centre’s fuel tax relief: More states, Union Territories follow up, cut VAT

Categories: GST Recent News

A TOTAL of 18 states and 6 Union Territories have cut taxes on auto fuel, following the move by the Centre to cut excise duty on petrol and diesel by Rs 5 and Rs 10 per litre, respectively.

All 17 NDA-led states, including Gujarat, Uttar Pradesh, Karnataka, Bihar and Haryana, have cut state taxes on petrol and diesel.

States and Union Territories that have not reduced Value Added Tax (VAT) on petrol and diesel include Maharashtra, Tamil Nadu, West Bengal, Punjab, Telangana, Andhra Pradesh, Kerala, Jharkhand, Chhattisgarh and Delhi.

Other states that have cut taxes on petrol and diesel include  Madhya Pradesh, Himachal Pradesh, Tripura, Manipur, Goa, Assam, Uttarakhand, Sikkim, Mizoram, Nagaland, Meghalaya, Arunachal Pradesh and Biju Janata Dal-ruled Odisha.

According to a release by the Petroleum Ministry, the UTs of Jammu and Kashmir, Chandigarh, Ladakh, Puducherry, Lakshadweep, and Dadra and Nagar Haveli and Daman and Diu have also cut VAT on petrol and diesel.

A steady rise in crude prices and elevated taxes, both Central excise duty and state taxes, which have been in effect since May 2020, played a key role in pushing the price of auto fuel over the pre-Covid retail price levels this year.

Between February and May last year, the government increased excise duties on petrol and diesel by Rs 13 per litre and Rs 16 per litre, respectively, amid a sharp decline in revenues due to the Covid-19 pandemic and related restrictions.

A number of states had also hiked state taxes on petrol and diesel to shore up revenues amid falling Goods and Services Tax collections.

The additional cuts in VAT on petrol and diesel have led to prices falling by up to Rs 12 per litre on petrol and Rs 17 per litre on diesel in certain states. Gujarat, Manipur and Assam are among states that have cut VAT by Rs 7 per litre each on petrol and diesel.

Certain states including Haryana, Uttar Pradesh, and Karnataka have announced that a cut in state taxes would bring prices of the auto fuels down by Rs 12 per litre each, including the impact of the excise duty cut by the Centre.

The government had, while announcing the cut in excise duty rates, called on states to “commensurately reduce VAT on petrol and diesel to give relief to consumers.”

The Centre had noted that the fall in fuel prices would come as a boost to farmers during the upcoming rabi season and also help middle- and lower-income households by curbing inflation and boosting consumption in the economy.

Source from: https://indianexpress.com/article/business/commodities/centres-fuel-tax-relief-more-states-union-territories-follow-up-cut-vat-7609452/