On November 3, the union government announced a cut in special excise duty on petrol and diesel by ₹5 and ₹10 respectively. The announcement also urged states to do the same . “States are also urged to commensurately reduce VAT (value added tax) on petrol and diesel to give relief to consumers” a press release from the union finance ministry said. Another release, issued by the ministry of petroleum on November 5, listed 14 states and union territories which had not reduced their VAT on petrol and diesel. Almost all of these states are ruled by non-NDA parties. Are these states not cooperating with the centre in bringing down inflation?
There is a difference between central and state taxes on fuel
Central taxes on petrol and diesel are split into multiple components. While some of these taxes are ad valorem – tax imposed as a share of price of the commodity — in nature, some of them are fixed.
