‘Unfair’: PM flags high VAT on fuel in non-BJP states

New Delhi, April 27

Prime Minister Narendra Modi on Wednesday flagged high prices of petrol and diesel in seven Opposition-ruled states, urging them to reduce value added tax (VAT) on fuel and pass the benefit to the common man.

Naming Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala and Jharkhand for not cutting taxes since November 2021 when the Centre had reduced excise duty on fuel to ease the burden of inflation on people, the PM appealed to these states to “work in national interest and in the spirit of cooperative federalism in times of global crisis.”

The PM was speaking to chief ministers during a Covid review meeting today but detoured to address fuel price surge, in his first remarks on the issue.

I am not criticising…

I am only praying for VAT reduction in the interests of people. —Prime Minister

Some states made money

Karnataka lost Rs 5,000 crore over six months by lowering tax on fuel and Gujarat lost Rs 3,500 crore, while some neighbouring states earned between Rs 3,500 cr and Rs 5,500 cr over the same period. —Narendra Modi, Prime Minister

Attributing the high cost to global and external factors, PM Modi noted that “strengthening the Centre-state coordination is more imperative today than ever before to strengthen the Indian economy and to align on economic decisions”. The PM said non-reduction of VAT by some states was “unfair and harmful.” “The Centre reduced excise duty on petrol and diesel in November 2021 and urged the states to reduce taxes and transfer the benefit to the people. Some states responded but others did not… resultantly the prices of petrol and diesel in these states are higher than in the others. This is unfair to the people of the state and harmful for the neighbouring states that lowered VAT and lost revenue on that count,” the PM said noting that Karnataka lost Rs 5,000 crore in revenue over six months by lowering tax on fuel and Gujarat lost Rs 3,500 crore while some neighbouring states earned between Rs 3,500 cr and Rs 5,500 cr over the same period.

The PM said a delay of six months had already occurred. “I am not criticising here…. I am only praying for VAT reduction in the interest of the nation and people,” he said.

To make his point, the PM also listed comparative prices of fuel in the Opposition and BJP-ruled states. “Daman and Diu reduced VAT and the cost there is Rs 102 as against the neighbouring Mumbai where it is Rs 120 a litre. Similarly, petrol costs Rs 115 in Kolkata but Rs 105 in Lucknow; Rs 120 in Hyderabad but Rs 106 in Jammu; Rs 118 in Jaipur but Rs 105 in Guwahati; Rs 111 per litre in Chennai but Rs 105 in Gurugram and Rs 103 in Dehradun,” the PM said.

He reminded the states of the 42 per cent share they received in central revenue and noted that “states must work as a team in the spirit of cooperative federalism to ward off the impact of global crisis”.

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