Do you think that the Centre needs to forego its revenue by cutting its fuel taxes further before asking states? Comment (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The Centre charges excise duty on the base price accounting for 26 per cent and 23 per cent of the final price of petrol and diesel, respectively. The excise duty is charged at a fixed rate per litre and has various components
· The States levy value-added tax (VAT) on the cost of petrol and diesel, including excise duty and dealer’s commission.
· Many States have tried to address the resulting volatility in tax collection by adopting a hybrid model wherein they charge a lower VAT on the fuel and apply a flat charge per litre of petrol and diesel.
· Tamil Nadu, Maharashtra, Andhra Pradesh and others have this hybrid model of taxing fuel. The other States and UTs apply other innovative charges, including road development cess, employment cess, pollution surcharge etc.
· The Prime Minister has pointed explicitly to Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala and Jharkhand, saying their unwillingness to cut taxes is burdening consumers.
· Cess is a tax charged over the basic tax liability, and it is levied for a particular purpose, such as education cess, infrastructure development cess etc.
· Tax rates on fuel may come down once it moves under GST. The current tax rate on petrol and diesel (Centre and States combined) amounts to a whopping 75 per cent, much above the higher GST slab applied for sin goods.
