Protests over rising fuel prices have made a few state governments announce tax cuts, though the Centre has stayed adamant on not cutting excise duty on petrol and diesel. (Delhi - Rs 72.83; Mumbai - Rs 77.32; Chennai - Rs 76.98; Kolkata - Rs 75.68.) The petrol price on September 10 is Rs 84.06 a litre, which is higher than in all metros except Mumbai (where the price is Rs 88.12 on the day.). After Parbhani, in Amravati, one litre of petrol on Monday was Rs 89.46 while diesel was sold at Rs 78.69.
The state had slashed Value-Added Tax on prices of petrol and diesel by Rs 2 and Re 1 respectively in October.
The ruling Bharatiya Janata Party has termed the hike in petroleum products as a "momentary difficulty" owing to an global crisis. "There is no explanation on the part of the respondent/government on why fuel prices remained static for approximately 22 days during the Karnataka elections".
While a cut in excise duty that the central government levies will impact fiscal deficit, states like Bihar, Kerala, and Punjab are not in a position to cut sales tax (or VAT), the official, who wished not to be identified, said. A record depreciation in rupee and about $7 a barrel rise in crude oil prices in about a month have pushed up fuel prices in the country.
Nearly half of the fuel price is made up of taxes. Similarly, Rajasthan also reduced taxes on both petrol and diesel by 4% leading to a cut of Rs 2.50 per litre.
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As it stands, the sales tax the state has imposed on petrol is 30.37 per cent, and that on diesel is 23.81 per cent.
Mumbai: In a bid to provide relief to consumers from the sky-rocketing prices of petrol and diesel, Andhra Pradesh CM N Chandrababu Naidu has announced a reduction of Rs 2 per litre in the prices of both petrol and diesel. Dealer's commission on petrol now is Rs 3.34 per litre and that on diesel is Rs 2.52. "The effect of this benefit has kept inflation under control despite rise in fuel prices".
Giving an example, the official said if petrol is at Rs 83, then Rs 20 goes to states as taxes plus Rs 10 from Centre's devolution.
While fiscal deficit means expenditure higher than income, current account deficit (CAD) is the difference between inflow and outflow of foreign currency.