State calculates its loss in VAT collection as consumers get Rs 2.08 and Rs 1.44 per liter profit on petrol, diesel
Soon after the Center cut excise duty on diesel and petrol by Rs 6 and Rs 8 respectively, The state could also announce a reduction in value added tax by Rs 2.08 and Rs 1.44.
Nagpur: Consumers expecting a further reduction in fuel prices due to the reduction in Value Added Tax (VAT) by the state government may be in for a complete disappointment.
Soon after the Center cut excise duty on diesel and petrol by Rs 6 and Rs 8 respectively, The state could also announce a reduction in value added tax by Rs 2.08 and Rs 1.44. However, this is not at all on account of any reduction in the rates of value added tax to be levied on fuel also on a percentage basis.
With the reduction of Rs 1.44 and Rs 2.08 for a liter of diesel and petrol respectively, there is also a proportionate reduction in the recovery of state VAT due to a reduction in excise duty.
Officials said that the state collects VAT on the fuel on an ad valorem basis. The value is arrived at after adding excise duty to the original price under VAT. As of now, the excise duty for one liter of petrol and diesel has been cut by Rs.8 and Rs.6, the effect of value-added tax has also come down by Rs.2.04 and Rs.1.44 respectively. There is no percentage reduction in value added tax rates at all.
Reduction in the percentage rates of VAT
The levy has come down completely in absolute terms as the base price on which VAT is calculated, has come down due to a reduction in excise duty.
State’s Additional Chief Secretary (Finance) Manoj Saunik has also vehemently confirmed that there is no reduction in the percentage rates of value-added tax at all. The official also said that a loss of Rs 2.08 and Rs 1.44 from the state’s share would result in a loss of about Rs 2,500 crore annually. He has also said that the same amount will be reduced from the consumer’s expenditure on buying fuel.
In a note issued by the state government, it has also been said that value added tax on petrol will also be reduced from Rs 32.80 to Rs 30.80 per liter. And with this, on diesel, it will be Rs 19.63 instead of Rs 20.89. It has also come down significantly due to a reduction in base price due to a reduction in excise duty by the Centre.
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