Sitharaman asserts Centre-States share brunt of rising fuel prices, calls for joint action
Pointing out that states and Centre earn revenue from taxes levied on petrol and diesel. Sitharaman highlighted that 41% of the tax collection goes to states
- Economy News
- 3 min read
Amidst the rising fuel prices, Finance Minister Nirmala Sitharaman on Friday stated that the brunt of the rising prices is not only on the Centre but states too. Admitting that the consumers have a case to say that there should be a reduction in prices, Sitharaman remarked that the issue is 'layered' and it will require the states and the Centre to deal with it in tandem. As per sources, the Finance Ministry has begun discussions on Wednesday to chalk out a solution amid the escalation of fuel prices.
"That’s where I use the word ‘dharamsankat'. It is a question which I would like states and the Centre to talk about because it’s not just the Centre which has duties on petroleum products, it also has the states charging,” the Finance Minister said on Friday while talking to reporters.
'Call of GST Council'
Pointing out that states and Centre, both, earn revenue from the taxes levied on petrol and diesel. Sitharaman highlighted that 41 per cent of the tax collection goes into the pockets of the states. When asked about the issue of bringing petrol and diesel under the Goods and Services Tax (GST) regime which would discard the existing taxes levied, the Finance Minister said that a call has to be taken by the GST Council on the same.
Currently, the central government levies a fixed rate of excise duty while states levy different rates of VAT. Under the GST, the two would merge and bring uniformity, solving the problem of fuel rates being higher in states with higher VAT. “Whenever the GST Council decides to take up this issue, they are well within their interest to take it up and discuss. It’s a call which the Council has to take,” Sitharaman said.
RBI Guv suggests tax reduction
On Thursday, RBI Governor Shaktikanta Das highlighted how high fuel prices not only impact cars and bike users but also manufacturing, transportation and other aspects as well. While addressing the 185th Foundation Day Celebration of the Bombay Chamber of Commerce and Industry, he aired his views on how diesel and petrol prices have an impact on the cost side.
Das advised that the Centre and the states need to coordinate their efforts and reduce taxes. He observed how the price of fuel and politics surrounding it often become part of a tug-of-war between the Centre and states as each collects indirect taxes from fuel sales and neither is generally willing to compromise due to revenue considerations.
Published By : Jitesh Vachhatani
Published On: 5 March 2021 at 18:35 IST