Responding to Prime Minister Narendra Modi’s criticism that states, together with Tamil Nadu, weren’t decreasing taxes on fuels, state’s finance minister Palanivel Thiaga Rajan stated on condition that the Union authorities’s taxes proceed to be excessive, it’s neither truthful nor possible for it to count on the state authorities to scale back the taxes additional.
The sole, easy and truthful strategy to enhance the scenario for all is for the Union authorities to take away the levy of cesses and surcharges and revert to charges that prevailed in 2014, he stated, including that he hopes that the Union authorities will heed to this cheap request within the true spirit of co-operative federalism.
Pointing out that Tamil Nadu had lower the VAT on petrol in August 2021 itself, previous to the Union authorities’s motion, which resulted in a reduction of Rs 3 per litre within the state, he stated it was estimated that the state would incur a lack of Rs 1,160 crore yearly resulting from this discount. “Yet this was done, despite the financial strain inherited from the previous government, to reduce the burden on the people,” Rajan stated in a press release.
The Union authorities’s levies on petrol have gone up considerably prior to now seven years for the reason that prime minister took cost for the primary time in 2014.
Though the income to the Union authorities has elevated manifold, there has not been an identical improve within the revenues to the states. This is as a result of the Union authorities has elevated the cess and surcharge on petrol and diesel whereas decreasing the essential excise obligation that’s shareable with the states, he stated.
In 2020-21, the income to the Union authorities from levies on petrol and diesel was at Rs 3,89,622 crore, which was 63% larger than the income of Rs 2,39,452 crore in 2019-20.
On the opposite hand, the Tamil Nadu authorities in 2020-21 acquired solely Rs 837.75 crore as share of the tax devolution from the Union excise duties on petrol and diesel towards the Rs 1,163.13 crore acquired in 2019-20.
On November 3, 2021, the Union authorities introduced a tax discount of Rs 5 per litre on petrol and Rs 10 per litre for diesel. Since Tamil Nadu levies ‘ad valorem’ taxes that are utilized after Union taxes, this transfer by the Union prompted a further lack of about Rs 1,050 crore in annual income to Tamil Nadu.
Source: www.financialexpress.com”