Fuel price cut: Not surprised to see opposition taking credit for Centre's excise duty reduction: Hardeep Singh Puri

May 23,2022

Fuel price cut: Not surprised to see opposition taking credit for Centre's excise duty reduction: Hardeep Singh Puri

Union Minister Hardeep Singh Puri.
Minister of Petroleum and Natural Gas Hardeep Singh Puri, in a tweet, expressed his disappointment over three state governments taking credit for reduced excise duty by the central government and not decreasing the VAT.

The tweet comes after Rajasthan, Kerala and Maharashtra decreased their petrol and diesel sales taxes following the call by Finance Minister Nirmala Sitharaman to give consumers further relief following the reduction in excise duty by the Centre, though others have been reluctant, citing the burden on their revenue streams.

Hardeep Singh Puri tweeted, "Not entirely surprised to see senior leaders from Rajasthan, Maharashtra & Kerala claiming credit for the actions taken by Centre & trying to pass off proportionate reduction in the VAT component due to a cut in Central Excise announced by FM, as their own reduction in VAT."
Explaining the VAT system, Puri said, "Simply put - VAT is charged on the entire selling price, inclusive of Central Excise. When it is reduced by ₹8 on petrol & ₹6 on diesel, the VAT component reduces by a proportionate amount of ₹2.25 on Petrol & ₹1.17 on diesel, in case of Rajasthan as it charges 31% VAT."

Puri explained how State Governments had nothing to do with the Centre's decision, and he tweeted, "This reduction has nothing to do with any decision taken by the state govt. First they didn't reduce taxes in November even as BJP states did and now they have gone a step further by claiming undue credit for the reduction announced by the Centre."

"If they are committed to providing relief to the citizens in their states who are still paying over ₹13-15 /ltr more than the BJP ruled states, they must reduce the percentage of VAT," he further added in his tweet.

Rajasthan Chief Minister Ashok Gehlot, in a tweet, said, "Due to the reduction in the prices of petrol and diesel by the central government, the state government will reduce VAT by Rs 2.48 per litre on petrol and Rs 1.16 per litre on diesel. With this, petrol will be cheaper by Rs 10.48 and diesel by Rs 7.16 per litre in the state."

While announcing the central government's decision to cut excise duty on May 21, Nirmala Sitharaman, in a tweet, said, "I wish to exhort all state governments, especially the states where the reduction wasn't done during the last round (November 2021), to also implement a similar cut and give relief to the common man."

According to a report by PTI, Maharashtra's Shiv Sena government reduced the VAT on petrol by Rs 2.08 per litre and diesel by Rs 1.44 per litre. A statement issued by the government said the state exchequer would have to bear an annual loss of Rs 2,500 crore as a result of this decision.

After the reduction in fuel prices by the Centre, the Left Democratic Front government in Kerala, on May 21, 2022, immediately reduced the state tax on petrol and diesel by Rs 2.41 and Rs 1.36 per litre, respectively.

Ashok Gehlot, Rajasthan's chief minister, said the state government would reduce petrol and diesel VAT by Rs 2.48 per litre and Rs 1.16 per litre, respectively.