Odisha says no to VAT reduction on petrol, diesel

Bhubaneswar: After Kerala, Odisha today turned down the Union government’s request to the states to reduce Value Added Tax (VAT) on petrol and diesel.

“We won’t reduce VAT on petrol and diesel as the state will register a dip in revenue collection,” state Finance Minister Sashi Bhusan Behera said.

This comes days after Union Petroleum and Natural Gas Minister Dharmendra Pradhan requested the state governments to reduce VAT on fuel to regulate the prices. The Centre had urged the states to cut sales tax or VAT by 5 per cent to ease the burden on consumers following excise duty cut by Rs 2 per litre on petrol and diesel.

Due to reduction in excise duty of Rs 2, the state would incur a loss of 84 paisa at the rate of 42 paisa per rupee as per the devolution process. Besides, the state would also lose 52 paisa which it would have collected as VAT at 26 per cent on that Rs 2 as excise duty.

Lashing out at the Centre, Behera stated that Union government is responsible for rising fuel prices albeit the international crude prices are on the decline.

The state unit Bharatiya Janata Party (BJP) has criticised the state government over this terming it as ‘intolerance’.

Worth mentioning, Kerala’s coalition government led by the Communist Party of India (Marxist) yesterday rejected the federal request to reduce taxes on petrol and diesel.