Amid spiralling fuel prices, four states have cut taxes to provide relief to consumers. Rajasthan had last month announced a reduction of Value Added Tax (VAT) from 38 per cent to 36 per cent, followed by the poll-bound state of West Bengal, which cut VAT on petrol and diesel by Re 1 yesterday.
Assam has also withdrawn an additional tax of Rs 5, which was imposed last year to generate revenue amid the Covid-19 crisis. The state of Meghalaya has given the biggest relief by cutting Rs 7.4 per litre on petrol and Rs 7.1 on diesel. It has also cut VAT on petrol and diesel by Rs 2.
On the other hand, the Centre has refused to cut excise duty despite the unprecedented rise in fuel prices in the past two months. As the Centre imposed the first lockdown in March 2020, it had raised excise duty by Rs 13 per litre on petrol and Rs 16 per litre on diesel from March-May 2020. Interestingly, crude oil prices at that time hovered around Rs 19.9 per barrel.
In his response, Union Petroleum and Natural Gas and Steel Minister Dharmendra Pradhan blamed it on oil-producing countries for “less fuel production”. “There are two main reasons for the fuel price rise.