SOARING PETROL, DIESEL PRICES: No proposal to reduces state taxes, says J&K Govt

Amidst requests for revision of state and central taxes on petrol and diesel to bring some respite to the people from soaring petroleum prices, Jammu and Kashmir Government has said there is no proposal to reduce the VAT rates on the fuel. 

The state tax on petrol and diesel has reached all-time high of Rs 26 a liter and Rs 13.34 per liter respectively. Currently petrol is priced at above Rs 82 a litre and diesel Rs 72 per litre in Srinagar.

   

In J&K consumers have to bear the burden of tax chargeable at the rate of 24 percent on a liter of petrol, plus Rs 3 charged as cess by the state government. Besides there is profit provision of Rs 3 a liter for dealers. Similarly, on diesel state government charges tax the rate of 16 percent tax plus cess of Rs 1 a litre. The VAT rate on petrol and diesel was increased in 2015 by the present PDP-BJP government when the international crude oil prices had slumped below $50 a barrel.    

A senior finance department official said state sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up.

“So it is discretion of the state to reduce the sales tax rate to tame fuel prices,” he said.

However, Finance Minister Syed Altaf Bukhari told this reporter that government has no such plan at the moment, as state cannot afford such a move this time. 

“There is no proposal to reduce state taxes on petroleum as we are not in such a position. However, there are chances that petroleum prices will come down in coming days,” he said.

Besides the state government, the present regime at the centre also increased the excise duty on petrol and diesel many times previously. With the central excise duty and other entry taxes, the total tax percentage reaches about 52 percent on petrol and 46 percent on diesel.

Former union finance minister, P Chidambaram on Wednesday claimed it was possible to cut up to Rs 25 per litre in petrol prices but said the centre government will not do so. In a series of tweets, the former finance minister said the bonanza to central government is Rs 25 on every litre of petrol and this money rightfully belongs to the average consumer.

“Central government saves Rs 15 on every litre of petrol due to fall in crude oil prices. Central government puts additional tax of Rs 10 on every litre of petrol. “It is possible to cut up to Rs 25 per litre, but the government will not. They will cheat the people by cutting price by Rs 1 or 2 per litre of petrol,” he said on Twitter. More than a week after state-owned oil firms ended a 19-day pre-Karnataka poll hiatus on revising fuel prices, petrol and diesel rates have touched record highs.

The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre. Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — reduced rates while others including BJP-ruled ones ignored the call.

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