Finance Minister Nirmala Sitharaman on Friday acknowledged that customers have a case for petrol and diesel costs to be brought down but mentioned a reduction in taxes to make that come about need to be a joint contact of the central and state governments.
As a great deal as 60 per cent of the retail price tag of petrol, which has shot above Rs one hundred-mark in some locations in Rajasthan, Madhya Pradesh and Maharashtra and is at an all-time higher elsewhere in the nation, is produced up of central and state taxes. Taxes make up for about 56 per cent of the record higher diesel prices.
Sitharaman, who had enhanced central excise duty on petrol and diesel by a record margin final year to mop up gains arising from international oil costs plunging to a two-decade low, remained non-committal on taking the initial step to reduce central taxes to give relief to customers.
For customers, “there is enough case to say that prices should be down, its a burden,” she mentioned whilst interacting with journalists at IWPC.
While the burden on the customers is “understood”, the pricing is a vexatious problem, she mentioned.
“That’s where I use the word ‘dharamsankat’,” she mentioned. “It is a question which I would like states and the Centre to talk about because it’s not just the Centre which has duties on petroleum products, it also has the states charging.”
Stating that each states and the Centre draw income out of taxes levied on petrol and diesel, she mentioned 41 per cent of the tax collections produced by the Centre go to the states.
“So there is an issue which is layered and as a result that has to be a matter ideally for the Centre and the states to talk about,” she added.
On the problem of bringing petrol and diesel below the Goods and Services Tax (GST) regime, which will finish the cascading influence of taxes and bring uniformity, the finance minister mentioned the contact has to be taken by the GST Council, the apex choice generating body of the indirect tax regime.
Currently, the central government levies a fixed price of excise duty whilst states levy various prices of VAT. Under the GST, the two would merge and bring uniformity, solving the dilemma of fuel prices becoming larger in states with larger VAT.
“Whenever the GST Council decides to take up this issue, they are well within their interest to take it up and discuss. It’s a call which the Council has to take,” she mentioned.
Asked if the Centre will take such a proposal to the Council in the next meeting most likely this month, she mentioned a contact will be taken “closer to the date of the Council meeting.”
Sitharaman raised excise duty by Rs 13 and Rs 16 per litre on petrol and diesel, respectively, in between March 2020 and May 2020 and it now accounts for more than one-third of the Rs 91.17 a litre price tag of petrol in Delhi and 40 per cent of Rs 81.47 per litre price of diesel.
Earlier this week, economists at SBI in a report stated that petrol price tag can go down to Rs 75 a litre across the nation if it is brought below the ambit of GST.
Diesel will come at Rs 68 a litre and the income loss for the Centre and states will be only Rs 1 lakh crore or .4 per cent of GDP, according to the calculation by the economists produced below the assumption of worldwide crude costs at USD 60 a barrel and exchange price at Rs 73 per dollar.