Slash in petro taxes unlikely | india | Hindustan Times
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Slash in petro taxes unlikely

THERE IS no likelihood of a further slash in the prices of petroleum products, at least for now, unless the Centre decides so. The state government has no plans to reduce commercial tax on petrol and diesel.

india Updated: Jan 21, 2007 02:59 IST

THERE IS no likelihood of a further slash in the prices of petroleum products, at least for now, unless the Centre decides so. The state government has no plans to reduce commercial tax on petrol and diesel.

The commercial tax (CT) on petroleum products in Madhya Pradesh is higher than the national average. After the downward revision of taxes on petro products by Maharashtra in November last year, MP is charging the highest rates on diesel.

Currently, the commercial tax on diesel in the state is around 30.4 per cent, while in other states it varies from 8 to 25 per cent.

The BJP, when in opposition, used to blame the Digvijay Singh regime for exorbitant commercial tax on petroleum products.

But its government has now realised that lowering tax rates will make a sizeable dent in one of the easiest ways of raising revenue. It is estimated that one per cent reduction in CT means an annual loss of Rs 70 crore and that’s why the state government is not willing to reduce taxes on petro products.

Commercial Tax Minister Babualal Gaur ruled out reduction on CT on petro products. “In the present situation, it is not possible to reduce taxes on petro products”. Whether the state government is considering reducing taxes on diesel, used by farmers, Gaur said there is no such proposal.

Talking to Hindustan Times, Gaur blamed the Centre for differences in tax rates. “The Union Government should constitute a high-power committee having representation of every state. In this body, uniform tax rates should be decided and implemented across the country,” he said. “We would readily accept the rates finalised by the committee,” he said.

On November 24, Maharashtra had reduced CT on diesel to 25 per cent from 34 per cent. Before this, Maharashtra accounted for the highest sales tax on diesel and Madhya Pradesh was the second. In MP, a litre of diesel costs Rs 38.50 against Rs 36.50 in Maharashtra after CT reduction. In Chhattisgarh, the CT is around 25 per cent, less by 5 per cent compared to MP.

Tax on petro products contributed about Rs 1500 crore to the state exchequer. This year the revenue from this front is likely to increase and this is the main reason why the state government is not prepared to lower the commercial tax.
A consumer has to pay over Rs 11 as tax on each litre of petrol and about Rs 8 on a litre of diesel at the rate of 28.75 per cent.

“It not only makes average consumer cough up more money to buy petrol and diesel but national permit vehicles en route Madhya Pradesh avoid refueling in the state due to higher tax rates on petrol and diesel.” said a petrol dealer.