NEW DELHI: The increase in pump prices by around Rs 5 per liter is only an impact on the weak recovery given that oil companies are still losing Rs 13 per liter on petrol and Rs 38 on diesel, not counting taxes, increasing pressure on states to cut value-added tax, which is up to 30% in some states.While oil companies are losing money, America has already taken a hit with lower tariffs, while consumers pay more to shoulder part of the burden, only to leave states to give up a share of their revenues to ensure oil retailers are left with enough money to meet their investment requirements and stay afloat.
“Consumers live in the United States; The responsibility does not fall solely on the center.
The burden must be divided, even if it is not equal,” An official said.
While those with the lowest VAT rates impose around 20% taxes, there are states exceeding the 30% level where taxes are imposed with additions per liter and infrastructure stops. In the past, NDA-ruled states have responded by cutting government fees, though some still keep them above average rates. But states like Tamil Nadu, Kerala and West Bengal have the highest pump prices, thanks to government taxes.
Telangana and Kerala have the highest pump prices.Although there have been discussions in the past about getting both types of motor fuels on the GST platform, states, cutting across party lines, have resisted the shift, and they have good reason to. Aside from the state tax on alcoholic beverages, the VAT on fuel is the only major source of private tax revenue for them, with property and vehicle registration among other prominent ways to absorb resources.For the states, the bulk of the resources comes through the GST apportionment apart from getting a 41% share of all central taxes — be it central GST, income tax or customs — but they ignore the cuts and surcharges levied by the Center which stays with them.