New Delhi: The Raman Singh government in Chhattisgarh has rejected Centre’s directive to cut value added tax (VAT) on fuel.
The Chhattisgarh government said they already have a lower VAT on fuel as compared to other states.
Earlier in the day, Gujarat became the first state to announce a reduction it VAT on diesel and petrol. In a move seen as an attempt to lure voters in the poll-bound state, the Vijay Rupani dispensation announced a 4% reduction in VAT.
"After the central government's instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today mid-night," Rupani said at a press meet on Tuesday morning. The state government is bound to suffer a loss of Rs 2,316 crore to the exchequer with this announcement.
Earlier this month, the central government had for the first time in its tenure reduced the excise duty on petrol and diesel prices and asked the state governments to do the same with VAT.
Union Finance Minister Arun Jaitley said the Rs 2 per litre cut in excise duty on petrol and diesel was done to give relief from relentless increase in prices and leave more money in hands of consumers. “Now it is up to state governments if they are concerned with the issue (to cut sales tax or VAT)," he said.
Oil Minister Dharmendra Pradhan had also said states should cut sales tax or VAT on petrol and diesel by 5 per cent.
Unlike the Centre, states levy VAT as an ad valorem duty which rises every time there is an increase in price. The Centre, Pradhan said, sacrificed Rs 26,000 crore in revenue in the cut in excise duty.
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