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Without a doubt, people across India are groaning under the weight of rising prices of petrol and diesel which have become unbearable but the centre refuses to ease the burden and instead deflects the responsibility on state governments on reducing taxes. Thus, on one side Centre refuses to lower price under the specious plea that states earn more in taxes. The other side of the price coin is the level of unfair competition among states fixing of different levels of tax slabs. Fuel prices in India are at a three-year high, although global crude rates halved over the same period, leaving many in the country to wonder why they must continue to pay more for petrol and diesel. The prices of fuel vary from state to state and this has invited a serious problem where vehicle owners would drive to nearby state to buy fuel. However, to prevent such practices that are detrimental to their economies, northern states such as Haryana, Punjab, Delhi, Himachal Pradesh and Uttar Pradesh – which are ruled by three ideologically divergent parties have decided to level the prices for the benefit of consumers. The price burden on the people is, however, not the prime motive behind the proposal. It is a step towards plugging their revenue losses and protect the petrol pump owners from losing business in a high tax zone. Tax differentials motivate automobile owners of one state to patronize pumps located in the states where fuel is cheaper due to lower VAT rates. This has been affecting the pump owners in the states where tax rates are comparatively high. Taxes on petrol and diesel are the main revenue sources of states. Because VAT is an ad-valorem levy, states have been silently reaping the windfall gains of high fuel rates at the cost of customers. The central government says that because states earn more in taxes on petrol and diesel, they should cut fuel prices. The ruling BJP even sent out tweets with a breakup of the levies on petrol in Delhi, showing that the state earned almost double of what the Centre did from fuel prices. The refusal of the Centre to reduce excise duties on petrol and diesel stems from the fact that the ruling party has its eye on the pie-more and more funds for projects in the hope that the benefits would also bring political dividends. The centre’s claim that states get Rs.21.48 or 42% per litre out of the excise charged on oil is not based on facts. The fact is that States receive 42% of only the basic excise duty from the Centre. The excise duty has three components: An additional duty (Rs 6), a special additional duty on excise (Rs 7) and a basic excise duty (Rs 8.48), adding up to Rs 21.48. States receive 42% of only the basic excise duty from the Centre. At a time of when subdued tax collections and disruptions from demonetization and GST have slowed down economic growth, the central government would find it challenging to cut the duty on petrol and diesel. Excise duty on petro products account for 50-55% of the total excise collection by the Centre. There is little logic by the centre against reduction on excise rates and leaving it to states because in the end, deficit-ridden states will be a bigger burden to the union government.<\/p>\n","protected":false},"excerpt":{"rendered":"
Insane oil logic<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[685],"tags":[],"class_list":["post-177783","post","type-post","status-publish","format-standard","hentry","category-editorial"],"_links":{"self":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/177783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/comments?post=177783"}],"version-history":[{"count":0,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/177783\/revisions"}],"wp:attachment":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/media?parent=177783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/categories?post=177783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/tags?post=177783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}