AP govt may not reduce additional vat on fuel

Amaravati: The Andhra Pradesh government may not further reduce tax on petro products since it has already cut Rs 2 a litre on petrol and diesel last month.

A one rupee increase in price of these products fetches an additional revenue of Rs 560 crore to the state exchequer and any cut would cause an income loss to that extent, a top official of the Finance Department said.

The state government levies 31 per cent Value-Added Tax plus Rs 4 as “additional tax” per litre on petrol and diesel. On 10 September, the state government had reduced the “additional tax” by Rs 2 a litre on these commodities. The government then claimed that the measure would cause a monetary loss of Rs 1,120 crore.

However, given the steady increase in price of petrol and diesel in the last few weeks, the government effectively did not lose any revenue as such, the Finance Department official pointed out. “If we further cut the tax, there will sure be a loss of revenue. Given the precarious state of our finances, there is no plan so far for a further reduction,” he added.

However, with the Centre and several state governments announcing fresh reduction in duties and taxes, the Chandrababu Naidu cabinet may take a call on the issue at its meeting here Friday, government sources indicated. Earlier in the day, the Central government announced a Rs 2.50 a litre cut in petrol and diesel prices, factoring in excise duty reduction of Rs 1.50 per litre and asking oil companies to absorb another Re 1.

BJP-ruled states including Gujarat, Maharashtra, Uttar Pradesh, Chattisgarh, Jharkhand, Assam and Tripura also announced a cut in VAT of up to Rs 2.5 per litre to effect a Rs 5 per litre reduction in pump rates.