Shock to the central government 8,700 crore per month, which works out to an annual loss to the exchequer, due to the steep cut in excise duty announced on petrol and diesel last November. 1 trillion, said a person for the data available with the government.
By how much did the Center cut excise duty on petrol last November? on 5 liters and diesel 10 per litre, after which some states reduced their Value Added Tax (VAT) on both auto fuel, What was the average reduction in VAT by the states 5 liters on diesel and 6 liters on petrol.
Between November 2021 and March 2022, the states that have deducted their VAT on fuel owe their total revenue 15,969 crores. Its, The BJP ruled states alone have waived loans worth Rs 11,398 crore.
Petrol and diesel taxed political issue With the Center and states expecting each other to further reduce taxes to provide consumer relief, while public spending requirements had increased after the pandemic, both at the central and state levels. Prime Minister Modi’s appeal on Wednesday to states, which did not cut taxes after the Center cut taxes last November, to follow suit, drew sharp reactions. opposition congress The party is saying that the Center collected 26 trillion in fuel taxes over the past eight years. Oil and gas prices in global markets have risen in recent months due to geopolitical tensions, with the Indian basket of crude averaging $102 a barrel in April, making the retail price inclusive of higher taxes for consumers.
The person mentioned above said that the seven states which have not reduced taxes on petrol and diesel since last November have earned extra 11,945 crore as compared to other states which have reduced VAT.
Contrary to the budget estimate of 6.65 trillion and revised estimates 7.4 trillion, Center transferred 8.82 trillion to the states before the end of FY22, the person said. Total release to states exceeds FY22 budget estimate 2.17 trillion.
Close monitoring of receipts from taxes and duties to the central government in FY22 enabled the Center to release two additional installments of central taxes in addition to the regular 14 installments transferred to states during a financial year, the person said. “The purpose of this high transfer was to ensure that state governments have all the financial resources they need for their development programmes,” said the person, who spoke on condition of anonymity.
RBI data shows that the total development expenditure incurred by the Modi government in the period 2014-22 was 90.9 trillion, which is being alleged by some sections of the opposition, the finance ministry said in a social media post on April 9. The clarification comes in the context of the opposition’s criticism about higher taxes on petrol and diesel. In that statement, it has also been said, quoting RBI data, that the expenditure done by the Modi government includes 24.85 trillion spent so far on food, fuel and fertilizer subsidies and 26.3 trillion on capital formation.
“The Modi government has not only transferred more to the states than it initially budgeted, but it has also spent an unprecedented amount on developmental expenditure including subsidies for the poor and capital formation, which has a multiplier effect on the economy.” The person quoted above said.
The total expenditure on providing free food to the poor during the pandemic and its aftermath (March 2020 to September 2022) under the Pradhan Mantri Garib Kalyan Anna Yojana is approx. 3.4 trillion, the person said. “It is therefore clear that the collection from fuel tax has been put to good use as development expenditure for the benefit of the nation and its people,” the person said. An email sent to the finance ministry seeking comment for the story did not elicit any response at the time of publication.