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Will have to reduce VAT on petrol, diesel, concedes Rajasthan’s Ashok Gehlot
Rajasthan chief minister Ashok Gehlot’s acknowledgement that he will need to reduce value added tax on petrol and diesel came soon after he wrote to PM Narendra Modi to seek cuts in central excise duty.
JAIPUR: Rajasthan chief minister Ashok Gehlot, who has been fronting the Congress counterattack on the Bharatiya Janata Party-led government at the Centre to push for a larger cut in central excise duty, on Tuesday adopted a change in strategy acknowledging that the state government would have to give in to pressure to reduce value added tax (VAT) on petrol and diesel.
“When all the states have reduced the prices, we also have to reduce it,” Gehlot said in Jodhpur on Tuesday, a remark that a sharp contrast to the letter that he had written to Prime Minister Narendra Modi earlier in the day to nudge the Centre to further reduce central taxes on petrol and diesel.
Gehlot, however, has not indicated the extent of cut in taxes that he will go for.
Also Read: Contextualising the debate on central and state taxes on petrol and diesel
In his letter, Gehlot reasoned that a reduction in central taxes will automatically lower the tax burden on account of state taxes as well, and added that though this will impact the state’s revenue, he was prepared to take the hit. Gehlot suggested that the Centre reduce the central taxes by ₹10 per litre on petrol and ₹15 on diesel.
To be sure, the Centre’s tax relief on petrol and diesel Thursday last only rolls back a part of the ₹13 and ₹16 per litre increase in taxes 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.
Gehlot’s change of heart comes days after Punjab chief minister Charanjit Singh Channi on Sunday decided to emulate BJP-ruled state governments which have reduced state taxes; even beat them at it.
“Petrol in Punjab has become cheapest in the region. As compared to Delhi, petrol in Punjab is now ₹ 9 less,” Punjab chief minister Channi said.
This decision appears to have made it that much difficult for Gehlot to hold on to his stand. Apart from public and political pressure, the Rajasthan government had been under attack from petrol and diesel stations complaining that pumps in border districts were losing business to those in neighouring states due to the high prices in Rajasthan.
Rajasthan Petrol Pump and Dealer association president Sunnet Bagai earlier said the state government increased VAT on diesel from 16% to 26% and from 26% to 36% on petrol after the Congress came to power in the state and it was time to bring it on par with neighouring states.
