Centre Rules Out Excise Duty Cut on Fuel as Andhra Pradesh Reduces VAT

Fuel prices were revised higher once again across Indian states pressurized by the international crude rates that have been increasing from looming concerns over US sanctions on Iranian exports.

Petrol price per litre today was raised to Rs 80.87 in Delhi, Rs 83.75 in Kolkata, Rs 88.26 in Mumbai and Rs 84.07 in Chennai. Diesel per litre was priced at Rs 72.97 in Delhi, Rs 75.82 in Kolkata, Rs 77.47 in Mumbai and Rs 77.15 in Chennai.

Amid the rise, PTI reported citing an unidentified government official that the central government, as well as some states, do not have the capacity to give up on revenue from taxes on fuel. It said that it would impact the fiscal deficit (when expenditure is higher than income) even in states like Bihar, Kerala, and Punjab that are not in a position to cut sales tax (or VAT).

Meanwhile following Rajasthan's 4 percent cut on VAT (value added tax) on Sunday, the state of Andhra Pradesh slashed Rs 2 per litre on petrol and diesel prices. This price cut will be effective from today.

Andhra Pradesh's Chief Minister N Chandrababu Naidu said, "Though the state is faced with a deficit budget, we have decided to reduce the tax and ease the burden on people. The state would have to forego a revenue of Rs 1,120 crore due to the measure."

A PTI report said that the state's government was relying on 31 percent VAT plus Rs 4 additional tax per litre on petrol and diesel. The Rs 2 a litre price cut will be on the additional taxes paid.