Petralle-Diesel: Four states slash taxes, now centre-rest states under increased pressure: So far, four states have cut taxes on fuel. Thereafter, the rest of the states and the central government are also under increasing pressure to bring in tax cuts on petrol and diesel.
Four states have so far cut taxes on fuel to provide some relief to the public from the skyrocketing price of petrol and diesel. Thereafter, the rest of the states and the central government are also under increasing pressure to bring in tax cuts on petrol and diesel.
The Rajasthan government has already announced a 2-2 per cent cut in value added tax (VAT) on petrol and diesel last month. The West Bengal government has also cut VAT on petrol and diesel by Rs 1 per litre on Sunday amid the poll environment. The Assam government has also removed the additional tax of Rs 5 that was levied on petrol and diesel amid the Covid crisis last year.
Similarly, the Meghalaya government has also given a major relief to the public and cut the tax on petrol by Rs 7.4 and diesel by Rs 7.1 per litre.
On the other hand, the Central government has consistently denied that it can do something in terms of petrol and diesel prices. Petroleum Minister Dharmendra Pradhan said in Parliament that the central government cannot do anything in this matter as the oil companies are now in the right to fix oil prices.
Prime Minister Narendra Modi also said recently that if previous governments had reduced the country’s dependence on crude oil, the country would not have to bear the burden of costly oil. It looks like the government is not in a mood to cut taxes right now.
The biggest reason for the record prices of petrol and diesel today is that the tax is very high. We take the example of Delhi to fix the prices of petrol or diesel within the country. First, the price of petrol is added to the base price.
For the same time, the base price in Delhi was Rs 31.82 per litre as on February 16, 2021. After that, 28 paise of transportation was added. Oil marketing companies then sell the oil to dealers at a price of Rs 32.10. The central government then levies excise tax (excise duty) of Rs 32.90 per litre of petrol. In this way, the price of petrol goes up to Rs 65.
In addition, each petrol pump dealer adds a commission of Rs 3.68 per litre of petrol. Thereafter, the price of where petrol is sold is added to the VAT or sales tax levied by the state government. For example, 20.61 rupees of VAT is added in Delhi. Thus, in the end, the common man had to pay Rs 89.29 for one litre of petrol in Delhi.
Government earns hefty earnings from tax on oil
The central government is expected to receive Rs 3.49 lakh crore from excise duty on petrol and diesel in the current financial year. This will be 39.3 per cent or about Rs 97,600 crore, from the budget estimates of Rs 2.49 lakh crore for the financial year 2020-21. The tax on petrol and diesel is going to earn a tremendous income this year despite the corona call to the government.