Finance Minister Nirmala Sitharaman, on Monday, 15 November, said people should ask their respective state governments why they had still not reduced the Value Added Tax (VAT) on petrol and diesel, despite the Centre recently reducing the excise duty on consumer fuel and asking the state governments to do so.
"Petrol and Diesel can't be included in Goods and Services Tax (GST) till the GST Council sets the rate for their inclusion," the Finance Minister added while addressing the media after her interaction with Chief Ministers and Finance Ministers of all states, as per NDTV.
The meeting was held to improve the investment climate in the country "in the wake of strong recovery" and the "opportunities accorded by a shift in the geopolitical realities post-pandemic".
On 7 November, Diwali eve, the Ministry of Finance reduced the excise duty on petrol by Rs 5 and the excise duty on diesel by Rs 10, with 17 National Democratic Alliance-led states, including Gujarat, Uttar Pradesh, Karnataka, Haryana, cutting state taxes on petrol and diesel.
While several states had reduced VAT to decrease the fuel prices, some states had asked the Centre to reduce the excise duty further.
Kerala's Finance Minister had termed the union government's move 'damage control'. The rising fuel price was one of the key reasons behind BJP's loss in many seats in the recent by-elections.
According to opposition parties, the Modi government had significantly hiked the excise duty in the past but only marginally reduced it. The parties claim the state governments never increased the VAT, so there was no question of reducing it and added that the prices would automatically decrease once the union government reversed its excise duty hikes.
(With inputs from NDTV.)
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