Finance Minister P Chidambaram on Friday urged states to share the subsidy burden on petroleum products. “The Centre is paying huge subsidy on fuel. Therefore, it is not unreasonable to expect some part of the burden is borne by state governments, too,” he told reporters.
In 2011-12, the Centre had collected Rs 95,349 crore by way of taxes on various petroleum products. Of this, it had shared Rs 15,778 crore with states. This reduced the government’s tax collections from petroleum products during that financial year to Rs 79,571 crore.
As states levied value-added tax (VAT), as well as a few other taxes, on petroleum products, their total collections rose to Rs 1,12,723 crore, against Rs 79,571 crore collected by the Centre.
Chidambaram also welcomed the decision of certain states to provide subsidy on some liquefied petroleum gas (LPG) cylinders, and urged all states to do the same. After the Centre capped the number of subsidised LPG cylinders per household to six a year, some Congress-ruled states increased the cap to nine cylinders a year.
The finance minister clarified the government would not levy excise and customs duty on unsubsidised cylinders. Earlier, a notification by the government had stated all subsidised cylinders would attract zero customs and excise duty. This would now be amended to state all cylinders would attract zero duty.
After abolishing 5 per cent customs duty and 8 per cent excise duty, the consumer price for non-subsidised LPG cylinder in Delhi would come to Rs 798. Subsidised ones are currently sold at Rs 399 a cylinder.
Chidambaram commended the Bihar government for lowering VAT on diesel from 18 per cent to 16 per cent on Friday. On account of this reduction, the state government would forego revenue of Rs 1.18 crore. On diesel, states levy VAT of 9.08 per cent (Punjab) to 25 per cent (Chhattisgarh).
On petrol, VAT varies from 18.41 per cent in Meghalaya to 32.59 per cent in Punjab.
Goa levies 0.1 per cent VAT on petrol.