VAT cut on fuel will incur Rs 500 cr loss: CM

Chhattisgarh Chief Minister Bhupesh Baghel on Monday said the cut in excise duty on fuel by the Centre will cause a loss of around Rs 500 crores to the state exchequer. He again urged the Union government to withdraw the cess imposed on the fuel.

Baghel was talking to reporters here before leaving for Dantewada district on his feedback campaign ‘Bhent Mulaqat’.

Union Finance Minister Nirmala Sitharaman on Saturday announced a reduction in the central excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

Asked if Chhattisgarh will reduce Value Added Tax (VAT) on petrol and diesel, Baghel said he could not understand Sitharaman’s comment of Sunday that the reduction in excise duty will not impact the state’s share in it.

If the Central excise is cut, then 41 per cent of its share which goes to the state will be automatically reduced, he said.

“The revenue collection through VAT (which is levied on ad valorem basis) will also dip automatically. State officials have informed me that we will suffer a loss of around Rs 500 crore (annually),” the Chief Minister said.

Baghel said he has been asking the Union                government to withdraw the cess it started imposing on petrol and diesel since last year and impose the same rate of tax on these products as was charged during the UPA government.

Sitharaman on Sunday said the cut in excise duty on petrol and diesel have been done in road and              infrastructure cess levied on the two fuels, collection on which was never shared with the states.