Amid calls to reduce VAT, Gehlot asks the Centre to cut excise duty for states  

In regard to the Opposition BJP’s proposal to cut the VAT on gasoline and diesel, Gehlot stated that decreasing the central duty would immediately affect the state’s VAT revenue. 

As Prime Minister Narendra Modi emphasized rising fuel prices in various opposition-controlled states, Rajasthan Chief Minister Ashok Gehlot stated on Wednesday that Modi may have mistakenly mentioned Jaipur among the locations with higher fuel prices, adding that petrol and diesel are more expensive in Bhopal, Madhya Pradesh, which is run by the Bharatiya Janata Party (BJP). 

At a meeting with chief ministers, Modi requested that states, including Rajasthan, decrease petroleum’s value-added tax (VAT). 

According to Gehlot, in the last eight years, the BJP-led government at the Centre has received around Rs. 26 lakh crore from petrol excise duty.

He said that by taxing gasoline and diesel, the government had earned the most money in the country’s history. 

CENTRE AND VAT 

Modi stated the Centre reduced excise duty, but several states did not reduce VAT to bring assistance to citizens. 

Rajasthan, according to Gehlot, decreased VAT on fuel and diesel by 2% in January 2021, although the excise tax at the federal level remained the same.

He went on to say that two days following the state budget, the Centre imposed a new 4 per litre diesel and 2.5 per litre petrol cess in the name of farm infrastructure and development (2021-22).

People in Rajasthan, according to Gehlot, will not be able to benefit from the VAT cut because of this.  

The Centre cut the excise tax on fuel by 5% and diesel by 10% per litre in November. In May 2020, the fuel tax was raised by ten cents per litre, while thirteen cents per litre raised the duty on diesel.

According to Gehlot, this indicates that the excise duty rise was not even partially lowered. 

Gehlot said, states charge VAT on the excise duty levied by the federal government. He went on to say that lowering the excise charge immediately reduces the VAT.

Rajasthan automatically decreased VAT by 1.80 per litre on petrol and 2.60 per litre on diesel, owing to the drop in excise tax in November. 

“On November 17, 2021, the state administration decreased VAT on gasoline by 4.96 per cent and diesel by 6.70 per cent to assist the ordinary man. There was a revenue loss of roughly 6300 crores each year due to the state’s three reductions,” Gehlot stated.

Modi only said income losses of 6000 crores in BJP-ruled Karnataka and 3500-4000 crores in Gujarat.

“Given the forthcoming assembly elections in these two states, they would certainly have been discussed. 

Gehlot mentioned that Modi discussed VAT, but not the Centre’s excise levy. “When Modi became Prime Minister in May 2014, excise duty on fuel was 9.20 per litre and 3.46 per litre on diesel, but today excise duty on petrol is 27.90 per litre and 21.80 per litre on diesel.” 

According to Gehlot, the states used to earn a part of excise duty under the previous Congress-led administration.

“However, because the states’ contribution has been steadily decreased to a few paise per litre, the states have been obliged to raise their VAT.” 

Satish Poonia, the state BJP chairman, stated that while the federal government has decreased excise duties on gasoline and fuel, the Gehlot administration has not reduced VAT, which is why people are not getting relief.

He went on to say that states run by the BJP, such as Karnataka, Gujarat, Uttar Pradesh, and Haryana, had decreased VAT to help the ordinary man. 

“Smuggling of petroleum products is at an all-time high in the state due to the high VAT. 

This has resulted in the closure of 1,500 gas stations in the state’s 17 border districts.” 

Edited by – Vanshika Sahu

Published by – Mohd Faizan