E-Paper
Maharashtra demands for its share of ₹50,000 crore from excise, cess levied on fuel
The cash-strapped Maharashtra government has demanded its share of more than ₹50,000 crore from the additional excise duty as well as the agriculture and road cess levied by the Central government on diesel and petrol.
The cash-strapped Maharashtra government has demanded its share of more than ₹50,000 crore from the additional excise duty as well as the agriculture and road cess levied by the Central government on diesel and petrol.
The demand was raised during the Maharashtra government’s meeting with the Niti Aayog earlier this week.
The basic price of petrol in Maharashtra is ₹40.97 per litre, on which Centre levies excise duty and cess of ₹32.90, while state government imposes ₹30.28 as value-added taxes (VAT) on every litre, taking the price to more than ₹107 a litre that includes the petrol pump’s commission of ₹3.86.
Similarly, diesel’s base price is ₹41.79 per litre, on which the Central excise and cess of ₹31.80 is added along with ₹21.28 as state government’s VAT and ₹2.58 as petrol pump’s commission. Out of the excise and cess on the fuel, the basic excise is just ₹1.40 and ₹1.80 a litre on petrol and diesel, respectively, while the remaining is additional excise and agriculture-road cess levied by the Centre over the past four years.
“The state governments gets share only in the basic excise, which is a little over 1% of the taxes collected by the Centre. The total excise duty and cess collected from Maharashtra by the Centre in 2020-21 was ₹46,464 crore including ₹32,432 crore from diesel and ₹14,032 crore from petrol. Against this amount, the Centre gave us ₹383 crore and ₹138 crore for diesel and petrol in devolution of taxes,” said an official from the finance department.
The state government’s debt is estimated to rise to more than ₹6.15 lakh crore. The state’s dues against the compensation for the losses of Goods and Services Tax (GST) from the Centre have crossed ₹30,000 crore.
The Central government has increased the additional excise duty and road-agriculture tax in the past few years by keeping the divisible component (sharing with the states) as low as around 1%. The excise and cess on fuel have been increased multi-fold in the past few years. The Central government’s collection from the excise duty and cess in 2020-21 was more than ₹3.3 lakh crore, of which Maharashtra’s contribution was 11.65% and 11.25% for diesel and petrol respectively.
“The devolution of the additional excise and road-agriculture cess on the fuel to states should be in the spirit of cooperative federalism,” the state government said.
Manoj Saunik, additional chief secretary, finance, said, “This has been demanded by all the states, but the Centre is not agreeing to devolve the collection. States get very meagre amount of the collection.”
The state has also requested the Centre to continue the GST compensation for three to five years more to make up for the losses Maharashtra has suffered because of the Covid-19 pandemic and lockdown. The five-year period during which the Centre has been compensating the states for their losses due to the roll out of the GST regime from July 1, 2017, is ending on June 30 next year.
“The end of the compensation will result in revenue deficit of ₹50,000 crore to the state exchequer. It would be difficult to cope with the gap, unless the transition period of the five years in increased further by three to five years,” the state has said.
Another official from the finance department said, “Out of ₹46, 464 crore collected from Maharashtra in the form of central duty and cess in 2020-21, only ₹521 crore were devolved back to the state which is little over 1%. Its expected to go over ₹50,000 crore in 2021-22. When the cess is collected in the name of agriculture and road development, the state has every right over the collection and we expect it to increase it to at least 3%. Instead of bringing petrol and diesel under GST, the Centre should first reduce the excise duty and the cess which will help in bringing down the prices significantly.”
