State governments have asked the Centre to share half of the projected Rs8,000 crore in losses arising out of the cut in duties and taxes on sale of petroleum products.
NEW DELHI: State governments have asked the Centre to share half of the projected Rs8,000 crore in losses arising out of the cut in duties and taxes on sale of petroleum products, Asim Dasgupta, West Bengal’s finance minister and chairman of the value-added tax (VAT) panel said on Monday.
Earlier this month, the central government raised prices of petroleum products to help oil marketing companies. Global crude oil prices, which peaked at about $140 per barrel on Monday, more than doubled over the last year, even as oil companies were forced to sell fuel at heavily subsidised rates leading to losses of about Rs300 crore per day.
The government had raised prices of petrol by Rs5 per litre, diesel by Rs3 per litre and liquefied petroleum gas (LPG) by Rs50 per cylinder.
Several state governments then announced a reduction in sales tax and value added tax on petrol, diesel and LPG. “Several states, confronted with this unusual situation have taken the decision to reduce sales tax on petrol and diesel and cut VAT rate on LPG or to provide subsidy,” Dasgupta said, after a meeting of the Empowered Committee of state finance ministers on VAT.
He said states would lose at least Rs8,000 crore due to the cuts as well as reduction in devolution to them caused by the Centre’s move to reduce customs and excise duties on petrol and diesel. “We want 50% of this loss incurred by states to be shared by the Government of India,” he added.
Dasgupta said that out of the 33 states and Union territories, 10 have cut sales tax on petrol, 15 have cut sales tax on diesel, and some states like Delhi have cut VAT on LPG.
The VAT panel would discuss in its next meeting in Srinagar between June 21 and 23, the issue of bringing aviation turbine fuel into the declared goods category, Dasgupta said.
Civil aviation minister Praful Patel had sought to bring aviation turbine fuel into the declared goods category so that the sales tax on it could be reduced to 4% from more than 20% at present.
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