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Finance Minister of Punjab Manpreet Badal addressing a press conference. (Photo by Virendra Singh Gosain/Hindustan Times via Getty Images)
Union Finance Minister Arun Jaitley on Thursday (October 4) announced the Centre’s decision to cut the excise duty on petrol and diesel by Rs 1.5 and Re 1 respectively. He also informed the states to cut similar tariffs by reducing VAT on fuel. Punjab, however, has been adamant about not reducing taxes, saying that it will hit revenues.
Punjab’s Finance Minister Manpreet Badal called the Centre’s move as “too clever by half”. Nearly 12 BJP-ruled states have already reduced VAT by Rs 2.5 per litre, which brings down the prices by Rs 5. Punjab charges the highest VAT of 35 per cent on petrol in north India.
Manpreet has been quoted by Hindustan Times as saying, “If I can calculate, both the cuts will hit the revenues of states too. After reaping a windfall and hiking excise duty several times since it came to office, the Government of India has made a meagre cut in excise duty and not special excise duty or additional excise duty in which states have no share. All states will also share the burden of the excise cut and lose 63 paisa per litre.”
Blaming the oil companies for booking heavy profits, he said, “They will show lower profits after absorbing the ₹1 per litre cut, which means the income tax paid by them will come down so will our share (42 per cent) in it. Effectively, the Government of India will take a hit of 1.5 per cent due to the meagre cut. It cannot ask states to take a bigger hit.”
Other states such as Kerala, Karnataka, Delhi, Odisha, Tamil Nadu and Bengal, which is ruled by Opposition parties have refused to take FM Jaitley’s advice.
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