Raj CM writes to PM, seeks further cut in excise duty on auto fuel

Jaipur, Nov 9 (IANS) With Rajasthan BJP on Tuesday launching a Twitter campaign -- #GehlotreduceVAT -- urging Chief Minister Ashok Gehlot to slash VAT on petrol and diesel, the Rajasthan CM has written an open letter to Prime Minister Narendra Modi, stating that the continuous reduction of states' share in taxes is against the spirit of fiscal federalism.

Gehlot said that the Centre first increased the additional and special excise duty on petrol-diesel and later reduced it minimally and tried to create an atmosphere of mutual competition among the states for reducing VAT, which is also contrary to the spirit of cooperative federalism.

Gehlot requested the Centre to further reduce the additional excise duty and special excise duty of the Central pool on petrol and diesel so that the general public can get the proper benefit of reduction in excise duty and VAT simultaneously.

Besides this, Gehlot also requested Modi to direct the oil companies to stop continuous increase in prices of petrol and diesel. Daily increase in prices by the oil companies will bring the benefit of relief given by the Centre and state governments to zero, he added.

He said, "During lockdown on May 6, 2020, the Central government increased the excise duty by Rs 10 per litre on petrol and Rs 13 per litre on diesel. On November 4, 2021, after reducing excise duty on petrol by Rs 5 per litre and on diesel by Rs 10 per litre, the Centre claimed that it has provided big relief to the general public, whereas the reality is that in 2021 itself, around Rs 27 and Rs 25 were increased on petrol and diesel prices, respectively."

"In such a situation, the reduction in excise duty by the Central government appears to be insufficient," he added.

Gehlot said that more than 22 per cent of the total revenue of Rajasthan comes from VAT on petrol-diesel. From January 29, 2021 till now, the Rajasthan government has reduced around Rs 3 per litre on petrol and Rs 3.80 per litre on diesel.

He said the state is incurring a revenue loss to the tune of Rs 2,800 crore per annum. In the current financial year till October, there has been a decrease of Rs 20,000 crore in revenue due to the Covid circumstances. Also, GST compensation of Rs 5,963 crore has not been released to the state by the Centre.

Gehlot requested the Prime Minister for early payment of the outstanding amount of GST compensation and to extend the period of GST compensation to states till the year 2027.

Meanwhile, the BJP on Tuesday took to Twitter demanding Gehlot to reduce VAT.

"After the Modi government reduced excise duty on petrol and diesel, the NDA-ruled states have brought further relief by reducing VAT on petrol and diesel... but what is stopping the non-BJP ruled states to do so? #GehlotReduceTax," wrote BJP MLA Deepti Maheshwari.

A few workers also shared the slashed price tag of petrol and diesel in Punjab and said that the Rajasthan CM should now get rid of his stubbornness on the issue of reducing VAT on petrol and diesel.