Government Again Asks States For Reduction In Sales Tax On Auto Fuels (23-Jul-2010)
In bid to smoothen the high oil prices, government has once again appealed to state governments to reduce sales tax component on transport fuels like petrol and diesel. The reduced taxes bring down the auto fuel prices to some extent and could curb inflation.
'Due to the increase in prices, a state like Uttar Pradesh alone would get additional revenue of Rs 350 crore on petrol (and) diesel under present sales tax rates. So the states should reduce the sales tax burden,' Minister of State for Petroleum Jitin Prasada said. The sales tax rate on petrol is 26.55% in Uttar Pradesh, while the rate on diesel is 17.23%. Prasad asked state government to take a cue from the Delhi government which had recently decided to reduce VAT rates.
It is noteworthy that the union Petroleum Minister Murli Deora had also asked state governments several times for reduction in state sales tax and VAT. A reduction in these indirect taxes would mostly off-set the recent hike in auto fuel prices.
As per Petroleum Ministry estimates, state governments will earn additional revenue of Rs 3,942.91 crore in a year at the present VAT and sales tax rates due to the recent hike in petrol and diesel prices. After the recent auto fuel hikes, Maharashtra would earn around Rs 550 crore followed by Andhra Pradesh which is likely to get nearly Rs 410 crore. If states wish to forgo some of their addition revenues, it will cool down the high level of petroleum prices.
Prasad also reiterated the government’s commitment in going ahead with the hiked petroleum prices and affirmed that the oil marketing companies (OMCs) are working on the price fixation mechanism.
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