PM Modi urges states to reduce VAT on fuel 'in spirit of cooperative federalism'

Prime Minister Narendra Modi on Wednesday urged the states to reduce the Value Added Tax (VAT) on fuel "in the spirit of cooperative federalism". During a virtual meeting with chief ministers, Prime Minister Modi stressed how the country fought a long battle against Covid with the spirit of cooperative federalism. "The same should be done for economic issues, given the impact of global issues like the ongoing war-like situation in the world," he added.

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"Let me give you a small example. The Centre reduced the excise duty on petrol and diesel last November to reduce the burden on the citizens. We also requested the states to reduce their taxes and transfer the benefit to the people. Some reduced taxes but some states did not give any benefit from this to the people", he said. "Due to this, the prices of petrol and diesel in these states continue to remain high. In a way, this is not only an injustice to the people of these states but it also has an impact on neighbouring states," he added.

While listing out the states that did not reduce VAT on fuel during the steep hikes, Prime Minister Modi said, "I am not criticising anyone, just discussing". The Prime Minister said it's natural that the states that reduced their taxes will suffer losses in revenue but several states took that "positive step" anyway.

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