Amid calls to reduce VAT on petrol and diesel, Gehlot asks Centre to further lower excise on them

JAIPUR: Refusing to lower the state's VAT on petrol and diesel in the wake of the Centre cutting the excise on two fuels by Rs 5 and Rs 10 respectively, Rajasthan Chief Minister Ashok Gehlot on Saturday said the Union government should further reduce the excise duty on them.

The reduction of the central excise will automatically lead to the lowering of the state's VAT collection, Gehlot argued, amid the Opposition BJP demand to the state government to lower the VAT on two fuels.

Gehlot made the assertion amid various non-BJP-ruled states refusing to slash the VAT to further lower the fuel prices in the wake of the Centre reducing its excise duty on petrol and diesel with various BJP-ruled states too slashing the VAT on them.

Gehlot argued that the state governments levy VAT on the revenue collected by the Central government in the form of Additional Excise Duty, Special Excise Duty and CESS from petrol, diesel and gas.

“In view of the inflation, the central government should make further reduction due to which the VAT collection of the states will automatically reduce in the same proportion,” he tweeted.

He said with the Centre's November 4 decision to reduce the excise duty, the state's VAT has also automatically been reduced by Rs 1.8 per litre on petrol and Rs 2.6 per litre on diesel which has caused an annual loss of Rs 1,800 crore in revenue collection of the state.

At the same time, the chief minister urged the Centre to ask oil companies to refrain from increasing the petrol and diesel prices daily.

“Otherwise, after Deepawali or assembly elections in five states, the oil companies will increase the price and make the benefit of the relief given by the central and state government to zero,” he said.

Gehlot said the central government has already reduced the share that all the state governments used to get from the Excise Duty.

Even otherwise, there has been a huge decline in the States' revenue due to the Covid pandemic, he argued further.

“About Rs 5,963 crores of GST Compensation of Rajasthan is yet to be paid by the central government,” he added.