10 non-BJP states yet to cut VAT on petrol, diesel

After the Centre last week slashed excise duty on petrol and diesel by Rs 5 and Rs 10, respectively, all Bharatiya Janata Party (BJP)-ruled states also cut value-added tax (VAT) on fuels.

Odisha and Punjab also decided to reduce VAT on fuels, with the latter becoming the only Congress-ruled state to bring down fuel prices.

Asked about the need to cut VAT in other Congress-ruled states, party spokesperson Pawan Khera said it’s being considered.

“Look at the BJP… for the last two years, they have been saying that [the issue of rising] prices of petrol and diesel have nothing to do with the government. But when they lose a by-election, suddenly the government realises that it can reduce the excise duty on petrol and diesel,” Khera said.

BJP spokesperson Gopal Krishna Agarwal reiterated the party’s position, saying that BJP-ruled states have asked the Congress to “walk the talk” and reduce VAT in the remaining two Congress-ruled states – Rajasthan and Chhattisgarh.

Here is a list of 10 states that are yet to announce a reduction in VAT on auto fuels:

1. Andhra Pradesh

The state government led by YS Jagan Mohan Reddy ruled out cutting VAT on petrol and diesel last Sunday and even published advertisements in newspapers clarifying its stand on the issue. The state government said the Centre did not adequately compensate it despite collecting ₹3.35 lakh crore as central excise duty. Petrol costs ₹108.20 in the state.

2. Chhattisgarh

Even though the Congress-ruled state is yet to announce a decision, reports suggest that it is mulling a move to cut VAT on petrol and diesel after Congress-ruled Punjab went ahead with it.

3. New Delhi

The Aam Aadmi Party (AAP)-led Delhi government is yet to declare a cut in VAT for fuels. Delhi’s Opposition – comprising the BJP and the Congress – have both demanded an immediate reduction in the taxes. On Saturday, members of New Delhi’s BJP unit protested outside chief minister Arvind Kejriwal’s residence over the Capital’s decision not to announce a reduction in VAT.

As of Monday, petrol and diesel in Delhi cost ₹103.97 and ₹86.67, respectively.

4. Jharkhand

Like other non-BJP ruled states, Jharkhand is also yet to make an announcement regarding a cut in fuel taxes. The Opposition BJP and the petroleum dealers’ association have put pressure on the Hemant Soren government, seeking a reduction in VAT.

5. Kerala

The government led by the Communist Party of India-Marxist (CPI-M) made it clear on Friday that it has no plans to go for a cut on VAT. Finance minister KN Balagopal argued that the Centre reduced fuel taxes only marginally. Balagopal termed the Centre’s excise duty cuts a “temporary, face-saving measure” in the light of the nationwide protests against rising fuel prices.

6. Maharashtra

The Shiv Sena-led Maha Vikas Aghadi (MVA) government also announced that it will not reduce VAT on petrol and diesel. It argued that it will have to take a hit of ₹1,700 crore for the period from November 2021 to March 2022 as a result of a cut in Central excise duty. The state, which is saddled with a public debt of over ₹6.15 lakh crore, said it doesn’t have the cushion to handle the impact from a revenue loss as it was already struggling with a mismatch in revenue and expenditure.

7. Rajasthan

The government in the Congress-ruled state is facing pressure from various quarters to cut VAT on fuels. Despite the Centre’s cuts, Rajasthan still has the country’s costliest petrol and diesel prices. In Jaipur, petrol costs ₹111.06 and diesel sells at ₹95.71. The state itself had been asking the Centre to cut excise duty, arguing that VAT could then subsequently be reduced.

8. Tamil Nadu

The government led by Dravida Munnetra Kazhagam (DMK)’s M.K Stalin hasn’t announced reductions in VAT on petrol and diesel. All India Anna Dravida Munnetra Kazhagam (AIADMK) leaders O Panneerselvam and Edappadi Palaniswami pointed out that fuel price reduction was part of the DMK’s election manifesto and cited the examples of several other states that have slashed VAT.

9. Telangana

Chief minister K Chandrasekhar Rao on Sunday ruled out a reduction in VAT. The TRS government hasn’t increased the state taxes on fuels since the formation of Telangana seven years ago. The CM also called upon the Centre to withdraw cess on petrol and fuel, which he said will automatically bring down the prices of petrol and diesel further.

10. Bengal

Chief minister Mamata Banerjee’s Trinamool Congress (TMC) termed the Centre’s decision to slash excise duty a “mere eyewash”. “The BJP-ruled state governments get their dues from the Centre on account of the taxes it levies, but Bengal remains deprived,” TMC general secretary and spokesperson Kunal Ghosh said.

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