Bhubaneswar: Odisha government will not reduce VAT on petrol and diesel following Centre’s plea, said Finance Minister Sashi Bhusan Behera today.
The Centre had urged all the states to cut sales tax or VAT by 5 per cent to ease the burden on consumers after it cut the excise duty by Rs 2 per litre on petrol and diesel.
However, the Odisha government rejected the plea and said that it will not reduce VAT on petrol and diesel.
Out of the Rs 2 reduction in excise duty by the Centre, the state government, as per the devolution process, is bearing a loss of 84 paise at the rate of 42 paise per rupee, said Behera.
Moreover, the state is also losing 52 paise which it would have collected as VAT at 26 per cent on that Rs 2, he added.
In the process, the state is incurring a total loss of Rs 1.36 after the Centre’s reduction of excise duty on petrol and diesel by Rs 2 per litre.
When the State is bearing more loss than the Centre due to excise duty reduction, there is no question of cutting VAT, said Behera.
He also blamed the Centre for increasing the fuel prices even though the prices have reduced in the international market.
Notably, the Centre had slashed Rs 2 excise duty on petrol and diesel following which Union Petroleum and Natural Gas Minister, Dharmendra Pradhan on October 4 had urged the states to cut VAT on petrol and diesel by 5 per cent.