Guj becomes 1st state to say yes to VAT cut on petrol, diesel

TN Declines To React, Kerala Says Reduction Not Feasible

BJP-ruled Gujarat became on Thursday the first state to say it would cut VAT on petrol and diesel after the Centre urged states to cut their levies on the fuels by 5%.Other BJP-ruled states, such as Madhya Pradesh, Chhattisgarh, Uttarakhand, and Jharkhand, and states where it shares power, like Bihar, seemed likely to follow suit with cuts or seriously consider the option of doing so.

“Apart from the central taxes that have been reduced, the Gujarat government will cut down on state-related taxes on petrol and diesel,“ chief minister Vijay Rupani was quoted as saying on TV .


Similarly , Madhya Pradesh was likely to announce a Diwali gift for consumers by slashing petrol and diesel prices this week. “We are seriously considering reducing VAT,“ CM Shivraj Singh Chouhan said on Thursday . State finance minister Jayant Malaiya said he would attend a GST Council meeting this week “where I will discuss the plan to cut 5% VAT on petrol and diesel“.


But Haryana, though a BJP state, appeared in no mood to cut taxes. “Before any further review of VAT on fuel in the state, stabilisation of GST is more necessary ,“ Haryana finance minister Captain Abhimanyu said, adding the state already had the lowest VAT on fuel in the country . He said they would wait for the impact of GST to stabilise in Haryana.


Kerala said a reduction was unfeasible, while Odisha felt the request was unjustified.Tamil Nadu declined to react, while Punjab finance minister Manpreet Badal said his state didn't need to effect any cuts because, though the Centre had hiked excise duty on fuel 11 times in the past 36 months, the state had not increased VAT on any of those occasions.


Kerala FM Thomas Isaac ruled out the possibility of a VAT reduction, saying the state government could not accept the extra burden that would be created by lowering VAT on the fuels as Kerala had already been crippled by the heavy burden of GST. He said the Centre's decision to cut excise duty by Rs 2 was an eyewash.


Odisha finance minister Shashi Bhusan Behera said, “ A poor state like Odisha is charging only 26% VAT, which is less compared to many states. Now, asking all states to cut it by 5% is not fair. Instead the Centre should take more steps at its level to bring down fuel prices.“ Behera told TOI a final decision on the Centre's request would be taken after consultations at a high level in government. “But, personally , I feel the request is unjustified,“ he said. Bengal finance depart ment officials said the government was trying to assess the impact on revenue if sales tax on both fuels was reduced by 5%. They said the Centre should impose GST on petroleum products to ensure a uniform price across the nation.


Himachal Pradesh excise and taxation minister Prakash Chaudhary said no decision had been taken on reducing VAT on petrol and diesel. “... if the need arises, I will discuss the matter with chief minister Virbhadra Singh as he has to take the final decision,“ he said.


Assam, where the BJP leads the government, finance commissioner Ravi Kota said the states, including Assam, were yet to receive an official notification from the Centre to cut VAT on fuel by 5%.