Amid pressure from all corners to cut value-added tax (VAT) on petrol and diesel, Rajasthan chief minister Ashok Gehlot on Tuesday urged Prime Minister Narendra Modi to slash central excise duty by a further ₹10 per litre on petrol and ₹15 per litre on diesel, saying that there was scope for the Centre to further bring down taxes on fuels.
Gehlot also urged the government to stop oil companies from repeatedly increasing the prices of petrol and diesel.
The Rajasthan CM’s letter to PM Modi comes two days after he wrote to union home minister Amit Shah, voicing similar concerns.
In his letter to Modi, Gehlot pointed out that GST worth ₹5,963 crore was yet to be reimbursed by the Centre. He also wrote that the state was bearing a loss of ₹2,800 crore for reducing VAT in January 2021.
Last week, the Centre slashed excise duties on petrol and diesel by ₹5 and ₹10 per litre, respectively.
“To give complete relief to the public, the additional excise duty and the special excise duty of the central pool on petrol and diesel should be further reduced by the GoI (government of India). This would ensure that the common man gets the benefit of reduction in excise duty and VAT simultaneously,” wrote Gehlot.
“We expect that the central government should reduce the excise duty by an additional ₹10 per litre on petrol and an additional ₹15 per litre on diesel. On reducing the excise duty… VAT of the state will also automatically reduce proportionately by ₹3.4 per litre on petrol and ₹3.9 per litre on diesel,” he wrote in the letter. “As a result, there will be an additional loss of ₹3,500 crore per annum in the revenue of the state, which the state government is ready to bear in the public interest.”
CM Gehlot said that from 2016, the basic excise duty levied on petrol and diesel by the central government has been reduced, which was shared by the states, but special and additional excise duty has been continuously going up – of which the states don’t get any share.
“The continuous reduction in the share of the states is against the principles of fiscal federalism,” Gehlot argued in his letter to Modi.
The Rajasthan chief minister said that in democracy, elected governments should mobilise necessary financial resources for development and social security schemes of the state.
The geographical location, economic scenario and local conditions of each of the states also have roles in shaping how the benefits of development plans reach the public, he explained.
Under some circumstances, state governments have the right – given by the Constitution – to raise revenue required for various development plans, he said.
The Rajasthan CM said more than 22% of the total revenue of his state comes from VAT on petrol and diesel.
The Opposition Bharatiya Janata Party (BJP) continues to corner the Gehlot government, demanding a cut in VAT on petrol and diesel.
Deputy leader of the Opposition Rajendra Rathore tweeted, “In the name of VAT, the state government is putting extra burden on the public. Neighbouring states has given relief to the common people from the rising prices of petrol and diesel by reducing VAT.”