While the union government’s move of reducing the excise duty on petrol and diesel by Rs 5 and Rs 10, respectively, last week was followed by all Bharatiya Janata Party (BJP)-ruled states, Odisha and Punjab cutting the value-added tax (VAT) on these fossil fuels, 10 states ruled by other parties have refused to follow suit. Odisha and Punjab, neither ruled by the BJP or even an NDA constituent, decided to reduce VAT on fuels, with the latter becoming the only Indian National Congress (INC)-ruled state to bring down fuel prices.
Asked about the need to cut VAT in other INC-ruled states, party spokesperson Pawan Khera said it was under consideration. “Look at the BJP… for the last two years, they have been saying that (the issue of rising) prices of petrol and diesel have nothing to do with the government. But when they lose a by-election, suddenly the government realises that it can reduce the excise duty on petrol and diesel,” Khera said.
BJP spokesman Gopal Krishna Agarwal reiterated the party’s position, saying that BJP-ruled states have asked the INC to “walk the talk” and reduce VAT in the remaining two INC-ruled states Rajasthan and Chhattisgarh.
Here is a list of 10 states that are yet to announce a reduction in VAT on auto fuels:
1. Andhra Pradesh
The state government led by YS Jagan Mohan Reddy ruled out cutting VAT on petrol and diesel last Sunday and even published advertisements in newspapers clarifying its stand on the issue. The state government said the union government did not adequately compensate it despite collecting Rs 3.35 lakh crore as union government excise duty. Petrol costs Rs 108.20 in the state.
Even though the INC-ruled state is yet to announce a decision, reports suggest that it is mulling a move to cut VAT on petrol and diesel after INC-ruled Punjab went ahead with it.
3. New Delhi
The Aam Aadmi Party (AAP)-led Delhi government is yet to declare a cut in VAT for fuels. Delhi’s opposition comprising the BJP and the INC have both demanded an immediate reduction in the taxes. On 6 November, members of New Delhi’s BJP unit protested outside chief minister Arvind Kejriwal’s residence over the Capital’s decision not to announce a reduction in VAT.
As of 8 November, petrol and diesel in Delhi cost Rs 103.97 and Rs 86.67, respectively.
Like other non-BJP ruled states, Jharkhand is also yet to make an announcement regarding a cut in fuel taxes. The opposition BJP and the petroleum dealers’ association have put pressure on the Hemant Soren government, seeking a reduction in VAT.
The government led by the Communist Party of India-Marxist (CPM) made it clear on 5 November that it has no plans to go for a cut on VAT. Finance minister KN Balagopal argued that the union government reduced fuel taxes only marginally. Balagopal termed the union government’s excise duty cuts a “temporary, face-saving measure” in the light of the nationwide protests against rising fuel prices.
The Shiv Sena-led Maha Vikas Aghadi (MVA) government announced that it will not reduce VAT on petrol and diesel. It argued that it will have to take a hit of Rs 1,700 crore for the period from November 2021 to March 2022 as a result of a cut in union government excise duty. The state, which is saddled with a public debt of over Rs 6.15 lakh crore, said it doesn’t have the cushion to handle the impact from a revenue loss as it was already struggling with a mismatch in revenue and expenditure.
The government in the INC-ruled state is facing pressure from various quarters to cut VAT on fuels. Despite the union government’s cuts, Rajasthan still has the country’s costliest petrol and diesel prices. In Jaipur, petrol costs Rs 111.06 and diesel sells at Rs 95.71. The state itself had been asking the union government to cut excise duty, arguing that VAT could then subsequently be reduced.
8. Tamil Nadu
The government led by Dravida Munnetra Kazhagam (DMK)’s MK Stalin hasn’t announced reductions in VAT on petrol and diesel. All India Anna Dravida Munnetra Kazhagam (AIADMK) leaders O Panneerselvam and Edappadi Palaniswami pointed out that fuel price reduction was part of the DMK’s election manifesto and cited the examples of several other states that have slashed VAT.
Chief Minister K Chandrasekhar Rao on 7 November ruled out a reduction in VAT. The TRS government hasn’t increased the state taxes on fuels since the formation of Telangana seven years ago. The chief minister called upon the union government to withdraw cess on petrol and fuel, which he said will automatically bring down the prices of petrol and diesel further.
Chief minister Mamata Banerjee’s Trinamool Congress (AITC) termed the union government’s decision to slash excise duty a “mere eyewash”. “The BJP-ruled state governments get their dues from the union government on account of the taxes it levies, but Bengal remains deprived,” AITC general secretary and spokesperson Kunal Ghosh said.