Fuel rises ₹5 per liter, states urged to cut VAT
Fuel just got ₹5 per liter pricier, and states charging over 30% VAT are getting attention.
Even with the hike, oil companies are still losing money: ₹13 on petrol and ₹38 on diesel before taxes.
The central government has already lowered excise duties, but now states are being urged to help out by cutting VAT too.
As one official put it, "The consumers live in the states; the responsibility is not just with Centre's. The burden has to be split, even if it is not equally," said an official.
States rely on fuel tax revenue
States like Tamil Nadu, Kerala, and West Bengal have some of the highest pump prices because fuel taxes bring in big revenue, right up there with registration of property and automobiles.
Many states aren't keen on moving fuels under GST since it could shrink their income from these taxes.
Plus, there is ongoing tension about how much revenue the Center keeps from cesses and surcharges, making it tricky to balance state budgets with keeping fuel affordable for everyone.