The Centre may be facing “dharm sankat (dilemma)” over record fuel prices. But four states have taken the lead with tax cuts to offer consumers relief and show the Centre that spiralling pump prices have less to do with rising crude but is more because of high levies.
On Sunday, poll-bound West Bengal became the latest to join the band, reducing VAT by Re 1 on petrol and diesel. Rajasthan was the first to move on January 29, reducing VAT from 38% to 36%. Assam, which too is going to polls, followed suit on February 12 by withdrawing additional tax of Rs 5 imposed last year to fund fight against Covid-19 pandemic.
Meghalaya has given the biggest relief of Rs 7.40 on petrol and Rs 7.10 on diesel, first with a rebate of Rs 2 followed by VAT reduction on petrol from 31.62% to 20% and from 22.95% to 12% on diesel.
But so far, the Centre has refused to cut excise duty it had cumulatively raised by Rs 13 a litre on petrol and Rs 16 on diesel between March and May 2020 when India’s crude purchase cost fell to $19.9/barrel as the pandemic shut down economies. It has, instead, blamed India’s dependence on oil imports and producers controlling output for fuel prices spiralling.