States may lose Rs 120 bn in share of central taxes over road & infra cess

The road and infrastructure cess will now effectively generate the same amount to the Central revenues in the next financial year

Reducing the basic excise duty on petrol and diesel by Rs 2 per litre and introducing a higher road and infrastructure cess, replacing an older cess, have kept the burden on the consumer unchanged, but the move will reduce the share of tax transfers to states by about Rs 120 billion (see chart 1).

Union Finance Minister Arun Jaitley introduced the road and infrastructure cess of Rs 8 per litre on petrol and diesel, replacing the older road cess of Rs 6 a litre (known as additional excise duty) and reducing the basic excise duty on petrol and diesel by