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Centre wants states to cut share of petrol tax

business Updated: Mar 28, 2012 09:34 IST
HT Correspondents
HT Correspondents
Hindustan Times
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The Centre wants the other states to follow Goa that came up with a unique solution to the rising petrol prices - slashing the prices by Rs 11 a litre by bring down the value-added tax that goes to the state exchequer.

A day after the Goa government's decision announced in its budget presentation - Rajasthan also cut petrol prices by Rs 1.06 a litre on the same day in its budget - minister of state for parliamentary affairs Rajiv Shukla said on Tuesday: "State governments should think about this (emulating Goa)."

Goa chief minister Manohar Parrikar announced the state would levy only 0.1% VAT on petrol. The move is in accordance with the BJP's poll promise and will bring down the petrol price in Goa from Rs 66 to Rs 55 a litre. http://www.hindustantimes.com/Images/Popup/2012/3/28_03_12-pg1b.jpg

In Rajasthan, where polls are due next year, chief minister Ashok Gehlot has reduced the VAT on petrol from 28% to 26%. The Congress government's move will bring down the price of petrol in the state from Rs 69.83 to Rs 68.77 a litre.

Pointing out that the state governments get about Rs 1.6 lakh crore as tax from petroleum products, Shukla said, "The central government had already reduced the custom duty... the share of the state governments is far bigger as far as money generated from petroleum products is concerned."

Consumers in Delhi, even after paying almost Rs 26 as central and state taxes on every litre of petrol - priced at Rs 65.64 a litre in the Capital - are likely to take another hit of Rs 4-5 a litre after an expected hike on March 31.

The proposed hike is being justified in the wake of high oil prices in global markets and the rupee weakening against the dollar.

The central taxes are fixed and do not increase when the base rate is raised, but the VAT - 20% in Delhi -rises with every increase.