Telangana may not cut VAT on fuel anytime soon

HYDERABAD: The state government may not slash the Value Added Tax (VAT) on diesel and petrol any time soon despite a clamour for reduction following a cut in duty on both fuels by Centre a day ahead of Diwali.
According to highly placed government sources, the state believes that its VAT was not extremely high when compared to many other states that impose an extra cess too. Telangana does not have a cess. The state charges 35% VAT on petrol and 27% VAT on diesel.
Also, the government has to implement several welfare initiatives, such as Dalit Bandhu, which require a significant amount of the state’s own revenue. The state earns nearly Rs 8,000 crore to Rs 10,000 crore from annual petrol and diesel sales, which form a big portion of the state’s own income after liquor.
Following the Centre’s duty cut, fuel prices have come down in the city too. Diesel prices have dropped to Rs 94 from the earlier Rs 107. Petrol, though still above the 100-mark, is now at Rs 108 from the earlier price of Rs 114.
The high fuel prices were also a hot topic during the just-concluded Huzurabad bypoll which was won by BJP’s Eatala Rajender. During the campaign, there were heated exchanges in the media between Eatala and finance minister T Harish Rao over the prices and tax charged by state and central government. On Friday, the state BJP unit demanded that TRS government too follow the BJP-ruled state governments and decrease VAT on fuel.
The price cuts, however, haven’t enthused the general public, with the common refrain being that they were still way high.
“First of all, the prices were already astronomical and not in tune with international prices. What is the point in dropping them now, I will be happy only when the prices constantly fall,” K Sekhar Gupta, an IT professional, said.