Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, has urged states with non-BJP governments to lower the value added tax (VAT) on petrol and diesel. His call for reduced VAT comes after the union cabinet’s recent approval of a Rs-200 cut on domestic LPG cylinders.
In an interview with CNBC-TV18, Puri highlighted that the central government had previously lowered excise duty on petrol and diesel in November 2021 and May 2022. Following these reductions, BJP-ruled states also decreased their VAT rates. Puri suggested that it’s reasonable for non-BJP states to now reduce their VAT rates, especially considering that some of these states have increased VAT recently. He mentioned that Punjab is an example of a non-BJP state that increased VAT.
Puri indicated that if non-BJP state governments also take steps to reduce VAT, the Centre could consider further efforts to lower petrol and diesel prices. He stated that the central government is willing to collaborate with states and make positive decisions in response to such efforts.
The context for this discussion is the ongoing criticism the government has faced from the opposition regarding high petrol and diesel prices. Despite a significant decline in international crude prices over the past year, domestic fuel prices have remained elevated. The government has faced pressure to manage inflation, which spiked to 7.44% in July, primarily driven by a sharp increase in food prices.
Since May of the previous year, petrol and diesel prices have remained unchanged after the finance minister announced a reduction in excise duty on both fuels. The government’s efforts to balance inflation and fuel prices have been under scrutiny as consumers grapple with rising costs.
Puri’s appeal for states to reduce VAT on petrol and diesel reflects the ongoing discussions around fuel prices and inflation management in the country.