Govt not ready to cut excise duty on fuel - Fusion - WeRIndia

Despite fuel prices touching record high, the Indian government is not ready to cut excise duty on fuel.

Even some state governments do not want to reduce taxes as well, as they have to bear revenue loss from it.

As per a government official, neither the Centre nor some States are interested to reduce taxes on fuel in the near future.

He said that if the central government reduces the excise duty on fuel, it will impact the fiscal deficit.

At the same time some state governments like Bihar, Kerala and Punjab are not in a position to reduce the taxes.

Earlier in this week, the Rajasthan government announced a 4 per cent cut in VAT on petrol and diesel.

Similarly, the Andhra Pradesh government yesterday cut sales tax due to which the fuel prices will be reduced by ₹2 each.

He added that the consumers will have to pay the taxes for the fuel they use. But, if the government even reduces ₹1 per litre, it will hugely impact the revenues by ₹30,000 crore per annum.

As a result, the rupee value will be further decreased or the developmental expenditure in the budget will be cut.

Hence, it is not a good idea for the government to reduce the taxes.

He anticipated that the government will be able to lower the taxes when it has ability increase compliance on income tax and GST.

Everybody knows that almost half of the fuel price is made up of taxes of both the Centre and the states. States collect approximately 42 per cent of what Centre gets.

The increase of excise duty and VAT in the last years has been increasing the income of both the Centre and states.

Yet, both are not interested to reduce the tax giving the excuse of fiscal deficit.

Image credit: Petrol Pump image by Paul Hamilton is licensed under CC BY-SA 2.0

Image Reference: https://www.flickr.com/photos/paulhami/5273372426