Tax cut should be joint call of Centre, states: FM on fuel price rise

Finance Minister Nirmala Sitharaman has acknowledged that consumers have a case for petrol and diesel prices to be brought down but said a reduction in taxes to make that happen should be a joint call of the central and state governments. Sitharaman, who had increased central excise duty on petrol and diesel by a record margin last year to mop up gains arising from international oil prices plunging to a two-decade low, remained non-committal on taking the first step to cut central taxes to give relief to consumers. For consumers, "there is enough case to say that prices should be down, its a burden," she said  on Friday while interacting with journalists at IWPC.in New Delhi.

While the burden on the consumers is "understood", the pricing is a vexatious issue, she said and added that  "It is a question which I would like states and the Centre to talk about because it's not just the Centre which has duties on petroleum products, it also has the states charging." Stating that both states and the Centre draw revenue out of taxes levied on petrol and diesel, she said 41 per cent of the tax collections made by the Centre go to the states."So there is an issue which is layered and as a result that has to be a matter ideally for the Centre and the states to talk about," she added.Currently, the central government levies a fixed rate of excise duty while states levy different rates of VAT. Under the GST, the two would merge and bring uniformity, solving the problem of fuel rates being higher in states with higher VAT.