State govts rake in more revenues as fuel prices rise

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On May 16, 2014, the petrol price was Rs 71.41 which took the percentage increase to 75.8.

"The objective to observe bandhwas not to trouble people, but to fight for their cause as they are living in the most trying times", said Karnataka Pradesh Congress Committee President Dinesh Gundu Rao, according to NDTV. Instead, more states are expected to reduce VAT, which will lower prices without impacting the Centre's tax collection.

Retail prices of fuels vary depending on local taxes, dealer commissions and the costs incurred in transporting them from refineries. Opposition parties have called for a nation-wide "Bharat Bandh" on Monday (September 10) to protest against the spiralling fuel prices.

The central government collected Rs 2,88,442 crore from indirect taxes on crude oil and other oil products in FY18. Propelled by a rise in global crude oil prices and a weakening rupee, the price of petrol in Delhi is now touching Rs 80 while diesel has crossed the Rs 72 mark.

While Rajasthan on Sunday announced a 4 per cent cut in VAT on petrol and diesel, Andhra Pradesh Monday said fuel prices will be reduced by Rs 2 each from cut in sales tax.

A litre of petrol was being sold in New Delhi for Rs 80.87 and in Mumbai for Rs 88.26.

Finance Minister Arun Jaitley remained evasive on the issue of cutting down excise duty to cushion the spiralling petrol and diesel prices, adding that global oil prices are volatile and have not shown any linear movement.

Explaining the division of levies on state and Centre's fiscal math, the official said that every state collects Value-Added Tax and also gets 42 per cent of the Centre's collections.

The Centre on Monday ruled out an immediate reduction in excise duty on petrol and diesel but indicated that it could consider options of selling NRI bonds or deposit schemes to foreigners to stem the slide in the rupee.

In the 13 days between August 29 and September 10, petrol and diesel prices have risen daily; in the case of petrol from Rs 81.45 to 84.06, and in the case of diesel from Rs 74.74 to Rs 77.98.

Mumbai has the highest tax rates among the metros. The excise duty on petrol was ₹9.2 per litre in 2014 and it has gone up to ₹19.48 per litre.

While fiscal deficit means expenditure higher than income, current account deficit (CAD) is the difference between inflow and outflow of foreign currency.



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