petrol tax cut: Andhra Pradesh govt rules out VAT cut on fuels

petrol tax cut: Andhra Pradesh govt rules out VAT cut on fuels

The Andhra Pradesh government on Sunday ruled out any reduction in value-added tax on petrol and diesel and blamed the Centre for not adequately compensating the state despite collecting Rs 3.35 lakh crore as Central Excise.

As opposition parties mounted pressure on his government demanding a cut in VAT, in line with the Centre’s decision to reduce Excise Duty on petrol and diesel, the Jagan Mohan Reddy regime put out full page advertisements in several newspapers to spell out its stand on the issue.

The full cover page ad in newspapers came a day after the BJP staged protests across the state demanding that the state government reduce VAT on petrol and diesel in line with the Excise Duty cut. The advertisement, however, contained several claims with respect to the central levies.

“Although the central government collected Rs 3.35 lakh crore as Central Excise on petrol and diesel, it distributed only Rs 19,475 crore as state’s share, which is just 5.80 per cent. The Centre has to distribute 41 per cent of taxes it collected to the states,” the government said in the text.

In a separate table, however, the government showed the Excise Duty collected (by the Centre) as only Rs 47,500 crore, of which 41 per cent (Rs 19,475 crore) was given away as the state’s share. It also said the Centre collected Rs 2.87 lakh crore in the form of cess and surcharges to avoid divisible pool of petro income and thereby reduced the state’s share of petro revenue.

The advertisement, issued in the name of Finance and Commercial Taxes Minister Buggana Rajendranth said it had been collecting an additional VAT of Rs 4 and a cess of Re 1, apart from the 31 per cent and 22.5 per cent VAT, on a litre of petrol and diesel respectively. “The state government never increased taxes on petrol and diesel except once to prevent further burden on common man despite a Rs 30,000 crore revenue loss during the Covid pandemic,” the government claimed.

Though the average crude oil prices have come down drastically, the price of a litre petrol was Rs 115.99 and diesel Rs 108.66 on November 1, whereas it was Rs 76.89 and Rs 71.50 respectively in May 2019, it said. “The very same people who have increased the price of a litre petrol and diesel beyond Rs 100 and reduced it now by just Rs 5 and 10 are protesting on roads for political mileage,” the government ad said, attacking the BJP indirectly.

The state government had to impose a special duty of “just one rupee” per litre as development and repair of 8,970 km of roads was undertaken, it claimed. Reacting to the ad, BJP state president Somu Veerraju said the state government’s claims were totally misleading. “The ad is full of lies. How could the state government make false claims based on all-India revenue? It should clearly state how much share it has received from the Centre,” Veerraju demanded. When many other states reduced VAT, what was the hitch for AP to do the same?, he questioned.

The Telugu Desam Party too called the advertisement “fake” and it only revealed the government’s intention to not reduce VAT. “Our (previous) government reduced VAT on petrol and diesel by Rs 2 but this regime’s ad clearly overlooked the fact. The government should stop such fake claims and immediately reduce VAT to lessen the burden on people,” TDP general secretary and MLC Nara Lokesh demanded.

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