On the 27th of April, Prime Minister Narendra Modi came down heavily on states over Value Added Tax (VAT) on fuel.
During a high level meeting with Indian states’ chief ministers, Mr. Narendra Modi pointed out that West Bengal, Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra, Kerala and Jharkhand has not reduced VAT on fuel. He urged CMs of the aforementioned states to reduce taxes “in the spirit of cooperative federalism.”
Listing fuel prices in cities across the country, Mr. Narendra Modi pointed out that the states which had lowered the VAT have lower fuel prices. He said, “Let me give you a small example. The Centre reduced the excise duty on petrol and diesel last November to reduce the burden on the citizens. We also requested the states to reduce their taxes and transfer the benefit to the people. Some states reduced taxes, but some states did not give any benefit from this to the people. Due to this, the prices of petrol and diesel in these states continue to remain high. In a way, this is not only an injustice to the people of these states, but it also has an impact on neighbouring states.” He further added, “I am not criticising anyone, just discussing.”
It is to be noted, amid the rising fuel prices, which crossed Rs. 100 mark, many states, especially ones ruled by the Bharatiya Janata Party (BJP) have reduced VAT, due to which fuel prices slashed. However, non-BJP states ruled by the opposition did not reduce VAT, demanding the centre to reduce the prices, as a result, the burden of VAT of those states is on citizens. To reduce the prices and burden on the people, the PM urged state CMs to reduce the VAT.
VAT on fuel is a major source of revenue for state governments, collecting crores of revenue in an year.
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