Modi asked states to reduce fuel VAT in the ‘national interest’

28 April, 2022 | Riya Girdhar

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Petrol and diesel prices increased by a total of ten cents per litre between March 22 and April 6. Petrol costs 105.41 cents per litre in the national capital, while diesel costs 96.67 cents per li...

On Wednesday, Prime Minister Narendra Modi urged state governments to reduce the value added tax (VAT) on petrol and diesel.

In a virtual meeting with state chief ministers, the prime minister stated that the Centre had reduced excise duties on fuels in November of last year and had also requested that states reduce their taxes.

Domestic retail fuel prices have risen, with gasoline selling for more than $100 per litre in many places, driving up inflation and affecting households.

While Gujarat and Karnataka have reduced taxes, many others are about to do so.

“Many states like, Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala, Jharkhand did not agree to our request for some reason or the other, and the burden on the people of these states continued. I would not go into how much revenue these states gained during this period. But, now I am urging you that in the interest of the nation, please undertake what should have been done six months back in November. Give consumers in your state the benefit by lowering the VAT,” Modi stated.

Gujarat and Karnataka, according to the prime minister, have lost nearly 4,000 crore and 5,000 crore, respectively, as a result of tax cuts since November. Maharashtra, on the other hand, has amassed between 3,500 and 5,500 crore in the same time span.

Several BJP-ruled state governments, including Gujarat, Karnataka, Uttar Pradesh, Assam, Manipur, Haryana, and the NDA government in Bihar, moved to slash taxes when the Centre decided to lower excise duty on petrol and diesel by 5 and 10 per litre.

“I request to all states that during the current global problems, we should work as a team in keeping with the idea of cooperative federalism,” Modi said, referring to the Russia-Ukraine crisis and its influence on the global economy.

Since Russia’s invasion of Ukraine on February 24, global crude oil prices have been considerably boosted, resulting in a spike in local gasoline and diesel prices.

Between the 22nd of March and the 6th of April, the price of gasoline and diesel increased by a total of ten cents per litre. Petrol costs 105.41 per litre in the national capital, while diesel costs 96.67 per litre.

The BJP-led Union government has been chastised for high fuel costs, and the Centre has maintained that it has been pressing oil marketing companies to modify prices in line with global rates, while states should drop VAT following the November reduction in excise charges.