Nirmala Sitharaman Urges States To Reduce VAT On Fuel After Excise Duty Cut

Finance Minister urged all state governments, especially those which had not reduced excise duty on November 4, 2021, to also implement a similar cut

Nirmala Sitharaman Urges States To Reduce VAT On Fuel After Excise Duty Cut

Finance Minister Nirmala Sitharaman announced major economic decisions on Saturday

Days after a war of words had erupted between Central Government and states in the aftermath of Prime Minister Narendra Modi requesting them to reduce value added tax (VAT) on fuel prices, Finance Minister Nirmala Sitharaman on Saturday announced a cut in excise duty on petrol and diesel by Rs 8 and Rs 6 a litre, respectively.

Making the announcement through a series of tweets, the Finance Minister exhorted all state governments, especially the ones which had not reduced excise duty on November 4, 2021, to also implement a similar cut and give relief to the common man.

The Finance Minister's request to states to cut down excise duty comes just weeks after Mr Modi's similar exhortation to non-BJP ruled states to reduce VAT on fuel prices, that had led to a bitter confrontation between them and the Centre.

The non-Congress states had retaliated to the Prime Minister's request by alleging that rather, it was the Union Government which was fleecing citizens by levying a variety of taxes and cesses.

Meanwhile Ms Sitharaman also announced that the Government will give Rs 200 per cylinder subsidy to Ujjwala Yojana beneficiaries for 12 cylinders in a year to help ease some of the burden arising from cooking gas rates rising to record levels.

A 14.2-kg LPG cylinder costs Rs 1,003 in the national capital. Pradhan Mantri Ujjwala Yojana beneficiaries, the poor women who got free connections, will get Rs 200 subsidy directly in their bank accounts and the effective price for them would be Rs 803 per 14.2-kg cylinder.

This excise duty cuts along with Rs 5 cut on petrol and Rs 10 reduction on diesel effected from November 4, 2021, rolls back the Rs 13 per litre and Rs 16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices at that time.

The excise duty hikes of 2020 had taken central taxes on petrol to their highest level of Rs 32.9 per ltire and that on diesel to Rs 31.8 a litre.

After the latest excise cut, the incidence of central tax on petrol will come down to Rs 19.9 a litre and that on diesel to Rs 15.8 per litre.

Ms Sitharaman further announced that the Government is calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices.

Import duty on some raw materials of steel will be reduced and export duty on some steel products will be levied, she tweeted.

The Finance Minister further informed that steps are being taken up to improve the availability of cement through better logistics to reduce its cost.

Continuing with big ticket announcements, the Finance Minister further informed that in addition to the fertilizer subsidy of Rs 1.05 lakh crore announced in the Union Budget, an additional amount of Rs 1.10 lakh crore is being provided to further cushion the farmers.