‘Ask Your Government Why…’: Finance Minister On State Taxes On Fuel


'Ask Your Government Why...': Finance Minister On State Taxes On Fuel

Nirmala Sitharaman said the government had already appealed to all states to reduce VAT.

New Delhi:

People should ask the state governments they had voted for if some of them have not cut fuel rates, Finance Minister Nirmala Sitharaman said at a press briefing on Monday night. On why some states have not reduced Value Added Tax (VAT) on petrol and diesel even after the Centre recently cut the excise duty on consumer fuel, she said the central government had already appealed to the states and it is for the people to ask the parties they voted for.

“Petrol and Diesel can’t be included in Goods and Services Tax (GST) till the GST Council sets the rate for their inclusion,” the Finance Minister added.

Ms Sitharaman was addressing the media after her interaction with Chief Ministers and Finance Ministers of all states with a view to enhance the investment climate in the country “in the wake of strong recovery” and the “opportunities accorded by a shift in the geopolitical realities post-pandemic”.

Following widespread criticism over spiralling fuel prices, the Centre had reduced excise duty on petrol and diesel by Rs 5 and Rs 10 per litre respectively on Diwali eve. Several states had reduced VAT to bring down fuel prices. However, some states have demanded that the union government further reduce excise duty. The Finance Minister of Kerala, for example, called the centre’s move “damage control”. The ruling BJP’s loss in many seats in the recent by-elections was also attributed to rising fuel prices, among other factors. 

Opposition parties have argued that the Modi government has only marginally reduced the excise duty after having hiked them significantly in the past. They claim that state governments did not increase VAT so there’s no question of reducing it and that prices will automatically go down if the Centre reverses its excise duty hikes.