Chandrababu Naidu cuts Rs 2 on Value-Added Tax on fuel, blasts YSRC

Daniel Fowler
September 12, 2018

Though AP and Rajasthan governments' decisions put a psychological pressure on KCR to take a similar decision on petroleum prices, the Telangana chief minister is unmoved in this direction, leading to criticism from the opposition. "Alternatively, a $1/barrel increase in oil prices translates, on an average, into ₹1,513 crore revenue gain to all the major 19 States", the SBI research report said.

The Delhi High Court on Wednesday refused to interfere in a public interest litigation (PIL) seeking the sale of petrol and diesel at reasonable prices instead of letting oil companies increase the rates exorbitantly.

In Delhi, a litre of petrol cost Rs 80.87 and diesel cost Rs 72.97 - both marking an increase of Rs 0.14 per litre. In Mumbai and Thane, the Maharashtra government charges a VAT/sales tax at 39.12 per cent on petrol, and 24.78 per cent on diesel.

This windfall gain will have a positive impact on state finances, which might push down the states' fiscal deficit by 15-20 bps (100 bps or basis points equal to 1 per cent) provided other things remain unchanged. State oil companies publish local rates of petrol and diesel daily, based on the average price of these fuels in the worldwide market for the trailing fortnight.

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The other highest centres include Nanded where petrol was retailing at Rs 89.93 per litre and diesel Rs 77.90, and Amravati Rs 89.93 and Rs 78.84.

Andhra Pradesh offered some relief, while Karnataka promised to consider a cut. However, this will result in a revenue loss of around Rs 12,000 crore (net of Rs 34,627 crore loss and Rs 22,700 crore gain from oil bonanza) to the states.

Introducing the resolution to cut Value-Added Tax in the Andhra Pradesh Legislative Assembly, Mr Naidu said the price of petrol and diesel had reached its peak with the anti-people policies of the central government over the past four years.

However, the court asked the government to consider an earlier representation pending before it on price rise of petrol and diesel and listed the matter for further hearing on November 16.

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