Finance minister Nirmala Sitharaman on Friday said the issue of tax burden on petroleum products was something that both the Centre and the states have to discuss as both draw revenue from these items.
In an interaction with members of the Indian Women’s Press Corps (IWPC), Sitharaman said consumer sentiment about the tax burden on auto fuel was understandable.
The minister’s suggestion that a Centre-state dialogue on this was needed assumes significance as both have shied away from lowering taxes on auto fuel as a reduction by either of them may open up a chance for the other to step up taxes. This poses a dilemma to policy makers.
“While the consumer feels the prices should come down, it is understood and appreciated. But pricing–that is where I use the word dharam sankat. It is a question I would like the states and the Centre to talk about because it is not just the Centre that has duties on petroleum prices…Both the Centre and states derive revenue from it. When the Centre draws revenue on any score, 41% of it goes to states. This is an issue which is layered. It has to be a matter ideally for both the centre and states to talk about,” the minister explained in response to a question on high fuel taxes.
In response to another question, Sitharaman said it was for the federal tax body, the GST Council, to take up this issue when it sees fit.