State govts rake in more revenues as fuel prices rise

Kenny Grant
September 11, 2018

Tamil Nadu collected Rs 3.69 crore more revenue, while West Bengal collected an additional Rs 2.06 crore in the same time period.

Petrol prices went up by 39 paise per litre and Diesel prices saw an upward trend of 44 paise per litre in Delhi.

Higher prices of diesel, the fuel used in trucks, also threaten to push up inflation, which could in turn force the central bank to raise interest rates.

Amid calls for a cut in fuel prices, some states announced cuts in their taxes.

Fuel prices on Saturday, 8 September, continued to soar and hit a new lifetime high, with the price of petrol crossing the Rs 80/litre mark at Rs. 80.38, and diesel at Rs.72.51 per litre.

Explaining the division of levies on state and Centre's fiscal math, the official said that every state collects Value-Added Tax and also gets 42 per cent of the Centre's collections.

Oil Minister Dharmendra Pradhan on Sunday said that India as a stable economy should avoid any knee-jerk reaction to volatile crude oil prices, indicating no cut in taxes on fuel despite petrol and diesel prices breaching record levels in the national capital.

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Similarly, petrol is being sold for ₹83.54 per litre in Chennai and the diesel retail price is ₹76.64 per litre.

"Between 2014 and now, excise duty on petrol has risen by 211% and 433% on diesel".

With the title "Truth of hike in petroleum prices", the ruling party with the help of bar diagrams explained that the percentage increase in the rise of fuels in 2018 is less than the increase during the previous two terms.

For now, the government has been non-committal on calls to cut taxes.

As it stands, the sales tax the state has imposed on petrol is 30.37 per cent, and that on diesel is 23.81 per cent.

Mumbai has the highest tax rates among the metros. This led to its excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. "Even states like Bihar, Kerala and Punjab are not in a position to cut state levies on petrol/diesel", the official said. The extra benefit accrued to states is Rs 3-4 per litre, he said.

In Kolkata, the price of petrol has been increased to ₹83.27 per litre while the diesel price has gone up to ₹75.36 per litre.

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