‘Centre earned highest revenue by taxing petrol & diesel’

Rajasthan CM Ashok Gehlot (File Image | IANS)

Jaipur | After Prime minister Narendra Modi on Wednesday urged the state governments to lower value added tax (VAT) on petrol and diesel in the “spirit of cooperative federalism”, Rajasthan Chief Minister Ashok Gehlot accused the Centre of earning the highest amount of revenue in the history of the country by taxing petrol and diesel.

Rajasthan imposes VAT of 30 per cent on petrol and 22 per cent diesel, which are among the highest in the country.

“The Centre earned about Rs 26 lakh crore from excise duty in the last eight years, which is the highest amount earned by any government in the history of the country by taxing petrol and diesel. Despite low crude prices as compared to the UPA era, petrol is being sold at more than Rs 110 a litre and diesel at more than Rs 100 per litre under the present regime.


During the tenure of the UPA government, the price of crude oil breached $100 per barrel, but petrol price didn’t exceed Rs 70/litre and diesel Rs 50/litre in view of the interest of the common man,” Gehlot said.

On the Prime Minister naming Jaipur, Gehlot said, “Perhaps the Prime Minister took the name of Jaipur to give a message to the BJP-ruled Bhopal where the prices of petrol and diesel are higher than Jaipur. Perhaps he called Bhopal as Jaipur by mistake.”

Gehlot elaborated, “The Rajasthan government reduced VAT by 2 per cent on petrol and diesel on January 29, 2021, even though the Centre had not reduced the excise duty at that time. Two days later, in the Union Budget for 2021-22, a new cess of Rs 4 on diesel and Rs 2.5 on petrol was imposed in the name of Agriculture Infrastructure and Development. Due to this, the people of Rajasthan could not get the benefit of reducing VAT by 2 per cent.”

“On November 4, 2021, the Centre reduced excise duty on petrol by Rs 5 and diesel by Rs 10 per liter, while during the Covid lockdown in May 2020, the Central government increased the excise duty on petrol by Rs 10 and diesel by Rs 13 per liter.

“The VAT of the states is levied on the excise duty of the Centre, i.e., by reducing the excise duty, the VAT automatically gets reduced. For this reason, due to reduction in excise duty on November 4, 2021, the Rajasthan government automatically reduced VAT by Rs 1.80 per litre on petrol and Rs 2.60 per litre on diesel.


“To give relief to the common man, the state government on November 17, 2021 reduced VAT on petrol by 4.96 per cent and on diesel by 6.70 per cent. Due to this reduction made three times, there was a revenue loss of about Rs 6,300 crore per year, but the PM only mentioned the revenue loss of Rs 6,000 crore in Karnataka and Rs 3,500-4,000 crore in Gujarat. These two states would probably have been mentioned in view of the upcoming Assembly elections there.”

The Prime Minister talked about the VAT of the states but did not give information about the excise duty of the Central government, he said.

“In May 2014, when Narendra Modi became the Prime Minister, excise duty was Rs 9.20 per liter on petrol and Rs 3.46 per liter on diesel, but today excise duty is Rs 27.90 per liter on petrol and Rs 21.80 per liter on diesel. During the UPA government, the states used to get their share of excise duty, but now the share of the states has been continuously reduced to just a few paise per liter, so the states are forced to increase their VAT,” Gehlot said.


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