Unreasonable to ask States to reduce VAT on fuel: PTR
CHENNAI: A day after Union Finance Minister Nirmala Sitharaman announced duty cut of Rs 8 per litre on petrol and Rs 6 per litre on diesel, and urged all States to follow suit, Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Sunday, ruling out any cuts by the State government, said it is unreasonable to expect States to reduce VAT (Value-Added Tax) when the Centre has only partially reduced the taxes it has imposed since 2014.
The central tax rate continues to be high compared to 2014 and it is not reasonable on the part of the Centre, which has increased taxes several times without consultation, to expect States to reduce them now, Thiaga Rajan said.
According to a senior Tamil Nadu finance department official, value-added taxes are calculated on ad valorem basis and any cut in fuel price by the Centre will automatically reduce the quantum of revenue generated through State tax. The Centre, this time, has reduced the tax component under road and infrastructure cess and not on the basic excise duty of which 41% is shared with States.
