While Andhra has blamed the Union govt for not adequately compensating the state, Telangana believes the state’s VAT is not high when compared to other states which impose a cess.

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news Fuel Prices Monday, November 08, 2021 - 16:45

With the Union government slashing the excise duty on petrol and diesel by Rs 5 and Rs 10 respectively, there are 13 states and union territories (UT) that have further reduced the Value Added Tax (VAT), according to a statement issued by the petroleum ministry. These include Maharashtra, NCT of Delhi, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala, Meghalaya, Andaman and Nicobar, Chhattisgarh, Rajasthan, Jharkhand and Odisha. 

However, it is to be noted that when fuel prices were rising, Tamil Nadu had already announced a reduction of Rs 3 in fuel prices, before the Union government announced a cut in excise duty. Punjab government on Sunday reduced the prices of petrol by Rs 10 and diesel by Rs 5. 

A total of 22 states and union territories have chosen to cut the Value Added Tax (VAT) on fuel prices. Several states have also announced a further reduction of Rs 7 per litre on VAT on petrol and diesel. BJP-ruled states like Gujarat, Uttar Pradesh, Karnataka, Bihar, Haryana, Tripura, Goa, Uttarakhand, Nagaland, Mizoram, Manipur and Assam announced cuts in VAT on the eve of Deepavali.

The UT of Ladakh has seen the most reduction in petrol prices, where the prices have fallen by Rs 13.43. It is followed by Karnataka and Puducherry, where petrol rates have reduced by Rs 13.35 and Rs 12.85. The most reduction in diesel price has also been undertaken by UT of Ladakh, leading to a fall in price by Rs 19.61 per litre, followed by Karnataka and Puducherry. Post the reduction in prices, the cheapest diesel is in Mizoram at Rs 79.55 per litre. 

Among the states that have not reduced the prices is Andhra Pradesh, which ruled out any reduction in value-added tax on petrol and diesel and blamed the Union government for not adequately compensating the state despite collecting Rs 3.35 lakh crore as Central Excise. The state has also said that it will take a call on reduction ‘at the right time.’

The Telangana government too may not reduce VAT on fuel any time soon as government sources say the state believes that its VAT is not extremely high when compared to other states that impose an extra cess as well. Telangana does not impose a cess and charges 35% VAT on petrol and 27% VAT on diesel. 

"We have not hiked VAT. We have not increased even a paisa so the question of reduction does not arise. Ever since the TRS government was formed, VAT has not been increased. Which fool will ask us to decrease (VAT)? The fool who increased it will have to reduce it," KCR said on Sunday evening, addressing the media. 

The Rajasthan government has asked the Union government to slash excise duty on petrol, diesel further amidst calls to reduce VAT. 

Following price revisions, the costliest petrol is sold in Rajasthan at Rs 111.10 per litre, followed by Mumbai at Rs 109.98 and Andhra Pradesh at Rs 109.05. In most BJP-ruled states, the fuel prices are below Rs 100 per litre mark barring Karnataka at Rs 100.58, Bihar at Rs 105.90, Madhya Pradesh at Rs 107.23 and Ladakh at Rs 102.99. The costliest diesel is now sold in Rajasthan at Rs 95.71 a litre, followed by Andhra Pradesh at Rs 95.18 and Mumbai at Rs 94.14.

On the eve of Deepavali, announcing the decision in reduction of excise duty, the Union government had said, “It rolls back a part of the ₹13 and ₹16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices at the onset of the Covid-19 pandemic.”

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