19 minutes ago
Image source, Getty Images
There is an ongoing debate as to whether the taxes levied by the Central Government or the State Governments are the reason why petrol and diesel are being sold at higher prices in India. What is the status of the recent reduction in excise duty by the Government of India?
Excise tax reduction:
Since the role of vehicles is inevitable from the time of production of all consumer goods to the time of retail sale, petrol and diesel are products that have an impact on the lives of all, regardless of whether they own a vehicle or not.
In this context, the Government of India has reduced the excise duty on petrol by Rs 8 per liter and on diesel by Rs 6 per liter.
“This will reduce the price of petrol by Rs 9.50 per liter and diesel by Rs 7 per liter,” said Indian Finance Minister Nirmala Sitharaman.
Following this, as the Government of India has reduced the excise duty, voices are being raised that the Government of Tamil Nadu should also reduce the value added tax, popularly known as VAT. It is also being criticized that the state government is currently levying higher taxes. What is the truth?
In the capital Delhi:
According to the official price list of Indian Oil Corporation, petrol was sold at Rs 96 in the Indian capital Delhi on May 23.
Of this, petrol is purchased at a base price of Rs 57.13. 57.33 to sellers. At this price, the excise duty of the Government of India is Rs. 19.9, the VAT of the Government of Delhi is Rs. 15.7 and the profit of the seller is Rs.
Image source, Screengrab / IOCL
Of this, the excise tax of the Government of India is higher than the VAT of the State Government. As for Delhi, VAT is 19.4%.
What is the situation in Tamil Nadu?
In Tamil Nadu, petrol is charged at Rs 11.52 per liter with 13% VAT on behalf of the state government and an additional Rs 9.62 per liter with 11% VAT on diesel.
Image source, Screengrab
VAT in Tamil Nadu
Tamil Nadu has not made any change in this tax system since 2014.
On 01.08.2014, the Central Government levied a tax of Rs. 9.48 per liter on diesel. 3.57 were also.
However, in November 2021, due to the additional chess on petrol, Rs. 32.90 per liter on diesel and Rs. It was also 31.80. This is on petrol and diesel at Rs. 27.90 and Rs. Reduced to 21.80. At present it has been further reduced to Rs. 19.90 and Rs. 15.80, said the Finance Minister of Tamil Nadu.
How much is the federal excise tax?
Image source, Screengrab
Excise duty of the Central Government till May 21 2022
As on May 21, the central excise duty was Rs 27.90 per liter (basic excise duty – Rs 1.40, special surcharge – Rs 11, agricultural development chess – Rs 2.50 and extra cess on road development – Rs 13.90 per liter. It has been reported that the cess for development will be reduced from Rs 13 to Rs 8 at present and only Rs 5 will be levied and now excise duty of Rs 19.90 will be levied.
If so, as on the 22nd, petrol purchased at a base price of Rs. 57.33 comes into the hands of the Government of Tamil Nadu at Rs.
21.53 plus 13% VAT (10.03 +11.52). With this, the seller commission has been increased by Rs 3.80 and petrol has been sold for Rs 102.56.
Accordingly, in Tamil Nadu, the tax levied by the state government is higher than the tax levied by the central government on the current petrol price.
What the Finance Minister is saying
However, the rise in prices was a result of taxes raised by the central government after 2014. In a statement, Tamil Nadu Finance Minister Palanivel Thiagarajan said that even after the tax cut, the central government should reduce the tax further as the current tax rate is still high compared to 2014.
Image source, P Thiagarajan
Finance Minister of Tamil Nadu
He added, “It is noteworthy that while raising taxes on petrol and diesel several times, the central government has not even once consulted with the states about it.
Although the federal government’s excessive tax increase has now been partially reduced, the measure continues to be high compared to 2014 rates. Therefore, it is not fair to expect states to reduce their taxes, ”said PDR Palanivel Rajan.
BBC Tamil on social media: