Friday, May 13, 2022

In 1st comments on petrol, diesel prices, PM singles out states for not cutting VAT on fuel

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  • ‘The Centre reduced the excise duty on petrol and diesel last November to reduce the burden on the citizens’
  • ‘Some (states)reduced taxes but some states did not give any benefit from this to the people’

New Delhi: Prime Minister Narendra Modi has urged states to cut Value Added Tax (VAT) on fuel in order to cool down fuel prices. During a virtual meeting with chief ministers, Modi asked state governments to take the decision in the spirit of cooperative federalism. While stressing how the country fought a long battle with COVID-19 with the spirit of cooperative federalism, the PM said, “The same should be done for economic issues, given the impact of global issues like the ongoing war-like situation in the world.”

Fuel prices: ‘States have not passes benefits of excise duty cut to consumers’

“Let me give you a small example. The Centre reduced the excise duty on petrol and diesel last November to reduce the burden on the citizens. We also requested the states to reduce their taxes and transfer the benefit to the people. Some reduced taxes but some states did not give any benefit from this to the people,” he said. 

Prices of petrol, diesel remain high: PM

“Due to this, the prices of petrol and diesel in these states continue to remain high. In a way, this is not only an injustice to the people of these states, but it also has an impact on neighbouring states,” he added. He said that states like Karnataka and Gujarat undertook tax reduction for the welfare of the people despite revenue loss, while their neighbouring states earned revenue by not reducing tax.

The Prime Minister said that last November, a request was made to reduce VAT but many states like Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala, Jharkhand did not do so for some reason. He said that 42 percent of the revenue from the Centre goes to state governments. 

“I am not criticising anyone, just discussing,” said Modi. The Prime Minister said it is natural that states which have reduced their taxes will suffer losses in revenue, but several states took that “positive step” anyway.

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