Hyderabad: Petrol and diesel prices continue to touch record highs day after day. Both the Centre and the states can bring down the price by cutting their respective taxes, but the Telangana state government wants the Centre to bring down the price by cutting excise duty instead of asking states to lower VAT.
On Wednesday, the price of petrol in Hyderabad was Rs 76.55, and diesel, Rs 68.72. Effective 6 am on Thursday that will go up to Rs 76.61 for petrol and Rs 68.88 for diesel.
Lowering VAT will result in huge financial losses for the state as VAT on fuel contributes 60 per cent to the state’s total tax collection. Finance minister Etela Rajender says the Centre should cut excise duty instead. “Telangana state government has already lost Rs 10,000 crore tax collection due to GST. VAT on fuel remains the major source of income for the state now. The state government cannot afford to lower VAT at this stage as it will put state finances under severe strain. It is better the Centre cuts down excise duty and the states will pass on this benefit to the consumers,” Mr Rajender said. He said for this reason the state has been opposing bringing petrol and diesel under GST. “After GST, the state government has subsumed 52 per cent of the taxes. We are now left with only 48 per cent taxes, of which VAT on petrol and diesel comprises a major chunk. The government is taking up several welfare programmes by spending over Rs 40,000 crore per year and to fund these schemes, the government needs to continue existing VAT rates on petrol and diesel," Mr Rajender added.
He hopes the Centre will announce an excise duty cut in the Union Budget 2018-19 on February 1.
