New Delhi: States have asked the Centre to share at least 50% of the Rs8,000 crore revenue loss which they will suffer on account of duty cuts on petrol, diesel and cooking gas during the remaining part of 2008-09.
“Several of the states, confronted with this unusual situation have taken the decision to reduce sales tax on petrol and diesel and VAT rate on LPG or to provide subsidy. We want 50% of this loss incurred by states to be shared by Government of India,” VAT Panel chairman Asim Dasgupta told reporters.
The Union Government hiked prices of petrol by Rs5 per litre, diesel by Rs3 a litre while LPG by Rs50 per cylinder effective from 5June.
Following the decision of the Centre, many states have reduced sales tax and VAT on petroleum products, which will result in revenue loss of Rs8,000 crore during the remaining part of 2008-09, to partly neutralize the impact of price hike, Dasgupta said.
While 10 out of 33 States and Union Territories have reduced sales tax on petrol, 15 States have reduced levy on diesel, he said. Pointing out that a wrong message is going to people that states can bear this loss, Dasgupta said, “States cannot take the beating further. They have limited revenue raising powers.”
On the issue of reducing tax on aviation turbine fuel, he said, the VAT Panel has sought data on price fixation from the Union government and will take a view at its meeting in Srinagar later this month.