Andhra Pradesh cuts petrol, diesel prices; Maharashtra mulls

Fuel prices touched a new high on Sunday on the back of continuing rise in global oil prices

Fuel prices touched a new high on Sunday on the back of continuing rise in global oil prices

While the Centre levies excise duty at specific rates, which are Rs 19.48 a litre for petrol and Rs 15.33 a litre for diesel, states impose sales tax/VAT at ad valorem as well as specific rates, besides cess (in some states only).

Observing that there were larger economic issues involved when it comes to fuel prices, the Delhi High Court on Wednesday said it can not ask the government to fix the price but directed it to decide the representation of a Delhi-based designer who has filed a PIL seeking direction to the government to fix fair price of petrol and diesel in accordance with the Essential Commodities Act.

Mumbai has the highest Value-Added Tax of 39.12 per cent on petrol, while Telangana levies the highest Value-Added Tax of 26 per cent on diesel. "While crude prices are plummeting in worldwide markets, the increase of fuel prices in India is disheartening".

To this, the PIL alleged that "instead of passing the lower oil prices to ease the burden on consumers, Respondent as well as State Govt. increased taxes to meet their fiscal deficit commitments".

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Thanks to the fall in the dollar-rupee and rise in petrol and diesel prices, states will garner an additional Rs 22,700 crore in revenue over and above budget estimates, according to a State Bank of India (SBI) research note.

Since mid-August, petrol price has risen by Rs 3.42 a litre and diesel by Rs 3.84 per litre as rupee hit record low against the United States dollar, making imports costlier. "Maharashtra, Madhya Pradesh, Punjab, Tamil Nadu, Andhra Pradesh, Rajasthan and Karnataka have the privilege to cut petrol prices by at least ₹3 from their existing rates and ₹2.5 on diesel, " it said. Petrol price has now crossed Rs 89 a litre in Maharashtra. Petrol price hit a new high of '88.26 per litre in Mumbai and '80.87 in Delhi on Tuesday while one litre of diesel was selling for Rs 77.47 in Mumbai and Rs 72.97 in Delhi.

The move to make fuel cheaper will cost the Andhra Pradesh exchequer up to Rs 1,120 crore.

Ghosh sees the largest revenue gain for Maharashtra (Rs 3,389 crore), followed by Gujarat (Rs 2,842 crore). "Though many States are having a revenue surplus, they use the surplus revenue to finance capital expenditure and interest obligations, " the report said.

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