New Delhi: Prime Minister Narendra Modi’s unusual appeal to opposition ruled states on Wednesday to reduce the state-specific value-added tax (VAT) has kicked up a storm over the nature of Centre and state taxes on petroleum products. Several opposition-ruled states and the principal opposition party, the Congress, criticized the Prime Minister for using the meeting with state chief ministers on the issue of COVID management as a platform to highlight the issue of high taxes imposed by them on the petroleum products, particularly petrol and diesel.
While opposition-ruled states such as West Bengal and Telangana criticized the Prime Minister for bringing up the issue of state taxes on petroleum products in his address at the end of COVID meeting with state chief ministers, the Congress asked the Prime Minister to account for Rs 27 lakh crore that the Centre has earned as taxes from the petroleum sector. The party said that states only get 32% of the total taxes and duties earned from the petroleum sector while the Centre gets the remaining 68% of taxes and duties.
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Ever wondered why air ticket prices haven’t come down?
— Hardeep Singh Puri (@HardeepSPuri) April 28, 2022 " class="align-text-top noRightClick twitterSection" data="
Aviation Turbine Fuel constitutes about 40% of the cost of airline operations.
But West Bengal, Maharashtra & Delhi impose massive 25%+ VAT on ATF while BJP states UP & Nagaland; & UT of J&K charge just 1%
">Ever wondered why air ticket prices haven’t come down?
— Hardeep Singh Puri (@HardeepSPuri) April 28, 2022
Aviation Turbine Fuel constitutes about 40% of the cost of airline operations.
But West Bengal, Maharashtra & Delhi impose massive 25%+ VAT on ATF while BJP states UP & Nagaland; & UT of J&K charge just 1%Ever wondered why air ticket prices haven’t come down?
— Hardeep Singh Puri (@HardeepSPuri) April 28, 2022
Aviation Turbine Fuel constitutes about 40% of the cost of airline operations.
But West Bengal, Maharashtra & Delhi impose massive 25%+ VAT on ATF while BJP states UP & Nagaland; & UT of J&K charge just 1%
However, instead of cooling down, this war of words of accusation and counter-accusation further intensified on the next day as Petroleum Minister Hardeep Singh Puri blamed high state taxes on aviation turbine fuel (ATF) for high flying costs in the country. In a Tweet, Puri said: “Ever wondered why air ticket prices haven't come down? Aviation Turbine Fuel constitutes about 40% of the cost of airline operations. But West Bengal, Maharashtra & Delhi impose massive 25 percent plus VAT on ATF while BJP states UP & Nagaland; & UT of J&K charge just 1 percent.”
In his speech yesterday, Prime Minister Modi had listed some data that was not there in the public domain earlier. The data cited by the Prime Minister included details of the revenue loss incurred by two BJP ruled states Gujarat and Karnataka as they lowered the VAT following the Centre’s decision to cut excise duty on petrol and diesel. PM Modi said that Karnataka would have collected more than Rs 5,000 crore and Gujarat more than Rs 3,500 to Rs 4,000 crore had they not lowered the state VAT on petrol and diesel.
The Prime Minister said that while Gujarat and Karnataka suffered revenue loss, their neighboring states, (an indirect reference to Maharashtra and Telangana) earned additional revenue of Rs 3,500 crore to Rs 5,000 crore during the last six months. Prime Minister Modi asked the opposition-ruled states to bring down the state VAT as it has already been delayed by six months so that the people of these states can benefit too.
