Published: Fri, October 13, 2017
Global Media | By Abel Hampton

Uttarakhand govt slashes Value-Added Tax, cess on petrol, diesel

Uttarakhand govt slashes Value-Added Tax, cess on petrol, diesel

This decision to slash Value-Added Tax and cess on petrol and diesel comes after the Centre last week slashed the excise duty on petrol and diesel in the wake of escalating prices. Gujarat and Maharashtra have announced a reduction of 4 percent and Himachal Pradesh has announced a 1 percent cut. Pant added that there "was some confusion on Wednesday because of which an impression was created that the state government was planning to reduce VAT and cess, but let me clarify there is no such decision taken at all". After GST, all the concessions being enjoyed by the industrialists stand withdrawn.

The last time the State GovernmenthadhikedVAT onfuelwas inJanuary 2016 when the worldwide crude prices were falling.

In 2016-17, Maharashtra consumed 426.80 crore litres of petrol and 976.46 crore litres of diesel. The Centre last week cut excise duty on petrol and diesel by Rs 2 per litre each to provide relief to consumers from three-month long relentless price hike. Both sectors have sought uniform pricing across the country under the one nation, one tax concept to facilitate equality, both for operators and State governments.

While all the other metro cities saw rise in their petrol and diesel prices on October 11, 2017, it was only Mumbai who saw massive decline in its prices compared to previous day. Moreover, petroleum products are key inputs for many industries and since they are outside the ambit of GST, the user industries can not claim input tax credit (ITC) on a key raw material.

70% of total final retail prices of petrol and diesel are accounted by tax charges. This raises questions about feasibility of petrol and diesel under GST in the current fiscal. Sources said that the state exchequer will have to bear an additional burden of Rs 3500 crore due to increase in salaries and pensions which are increased with effect from 1 January this year. Without such a cess, the government will have to take a huge hit on its revenues which could impact infrastructure spending.

"Our demand for reduction in cess on petrol and diesel products by the State government was rejected and we were informed that it is utilised to repay farm loans waiver package announced in June", Daruwala said. The government is trying to find way out by adopting a new industrial policy.

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