In the midst of soaring fuel prices, four states have cut taxes to ease the burden on consumers. Rajasthan announced a cut in sales tax from 38 percent to 36 percent last month, followed by the electoral state of West Bengal, which yesterday cut sales tax on gasoline and diesel by Re 1. Assam has also withdrawn an additional tax of 5 rupees that was introduced last year to generate revenue in the Covid-19 crisis. Meghalaya state has brought the greatest relief by cutting Rs 7.4 per liter for gasoline and Rs 7.1 for diesel. It also lowered the VAT on gasoline and diesel by Rs 2.
On the other hand, despite the unprecedented rise in fuel prices over the past two months, the center has refused to cut the excise tax. When the center imposed the first lockdown in March 2020, it had increased the excise tax by 13 rupees per liter of gasoline and 16 rupees per liter of diesel from March to May 2020. Interestingly, crude oil prices were hovering around 19.9 rupees a barrel at the time.
In response, Union Minister for Petroleum, Natural Gas and Steel Dharmendra Pradhan blamed oil-producing countries for "less fuel production". "There are two main reasons for the rise in fuel prices. The international market has reduced fuel production and the producing countries are producing less fuel in order to make more profit. This is making the consuming countries suffer," said Pradhan on Sunday in Assams Dhemaji, where PM Modi will be hold a rally today, ANI reported. The minister said the center had urged OPEC and OPEC Plus countries to increase production.
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Despite the minister's claims, the breakdown of the fuel price per liter paints a different picture. According to the latest prices, gasoline and diesel in Delhi cost Rs 90.58 and Rs 80.97 per liter, respectively, while crude oil costs Rs 63 / barrel. While gasoline and diesel cost around Rs 71.89 and Rs 64.65 per liter in Delhi a year ago, the price of crude oil was Rs 54.63 per barrel.
As the lockdown weighed on the centre's revenue, it increased the consumption tax on gasoline by 64 percent over the same period, from 19.98 to 32.90 rupees per liter and from 18.23 to 32.90 rupees for diesel. The VAT on gasoline, on the other hand, was increased from 15.25 to 20.61 rupees per liter, while it rose on diesel from 9.48 to 11.8 rupees per liter.
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The last time the center offered tax breaks was in October 2018 when the excise duty was cut by Rs 1.50 per liter and fuel traders were asked to adjust the cut as gasoline prices Rs 80 per liter and diesel by Rs 77 / Liters. In addition, 18 states had reduced VAT by 5 rupees per liter to pass the relief on to consumers.
Fuel prices hit new highs on the subway on Saturday, while remaining unchanged since then. At the latest price, gasoline and diesel were Rs 90.58 and Rs 80.97 per liter in Delhi, respectively, while prices in Mumbai were Rs 97 and Rs 88.60 per liter, respectively. So far in February, gasoline prices in Delhi have risen by 4.29 rupees per liter and diesel prices by 4.31 rupees per liter.
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