The State government is likely to take a couple of weeks more to take a decision on the demand to slash the additional ₹4 VAT on petrol and diesel.
The government has appointed the PricewaterhouseCoopers (PwC) as consultant to study the implications of reduction in VAT on petroleum products.
The PwC is expected to submit a report in a week after which the Finance Ministry would place it before the Cabinet for action.
According to information, a major chunk (18% to 19%) of revenue of the Commercial Taxes Department comes through VAT on petrol and diesel. The government is netting close to ₹9,000 crore on this count. The government is collecting VAT at the rate of 31% on petrol and 22.25% on diesel. In addition, a fixed charge of ₹4 is collected on both petrol and diesel. There is a demand to bring down the fixed charge to at least ₹2.
The government will have to forego ₹400 crore to ₹500 crore if the government slashes the fixed charge by a rupee. This apart, there is also a demand to bring down the VAT.
“A slash in fixed charge will definitely hit the revenue. To study the implications in a more scientific manner, the government has appointed the PwC as consultants. It will take a decision based on the report,” says a senior official.
The VAT is a major duty component adding to the end price of both petrol and diesel in the State. After slashing the excise duty on petroleum products, the Central government asked the State governments to reduce the VAT. But the State government seems to be in no mood to reduce it.
Finance Minister Yanamala Ramakrishnudu said recently that though some States had already slashed the VAT, we need to take our revenues and financial position into consideration before taking a decision.
