Fuel is on fire not just due to Central taxes, but also because of steep State taxes

@prashanthamine

Mumbai: Fuel prices are on fire these days not just because of Central taxes, but also because of steep State taxes. As per the data for February-March 2021 of the Petroleum Planning & Analysis Cell (PPAC) of the Union Ministry of Petroleum and Natural Gas, Sale of petroleum products is high in 13 states and State taxes like Value Added Tax (VAT), Sales Tax and other local body taxes are higher in the range between 25% to 36% in 15 major states across the country.

When it comes to contribution of taxes on Petroleum products to both the Central and State exchequers, the lion share of the tax pie is accounted for by Excise Duty for the Centre and Sales Tax or VAT in various States.

As per the PPAC data the Excise Duty collection for the 9 months between 2020-21 for the period between 2014-15 to 2020-21 is Rs 2,35,811 crore. While the contribution of Sales Tax/VAT to the state exchequer amounted to Rs. 1,35,693 crore for the same period.

The 15 states which have high state taxes include – Andhra Pradesh, Assam, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Nagaland, Odisha, Punjab, Rajasthan and Telangana.

The 13 states which have the highest sale of petroleum products include – Haryana, Uttar Pradesh, Assam, Bihar, Odisha, West Bengal, Chhattisgarh, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

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Of these states the Bharatiya Janata Party (BJP) is in power or shares power with allies in – Assam, Haryana, Karnataka, Madhya Pradesh, Uttar Pradesh, Bihar and Gujarat.

Whereas, the Congress and other opposition party governments are in power in – Andhra Pradesh, Odisha, West Bengal, Chhattisgarh, Maharashtra and Kerala.

In terms of State taxes/Goods and Services Tax (GST/SGST/VAT) on petrol and diesel the prominent states include – Andhra Pradesh has 31% VAT on petrol and 22.25% VAT on diesel; Assam – 32.66% VAT on petrol, 23.66% VAT on diesel; Haryana – 25% VAT on petrol, 16.40% VAT on diesel; Karnataka – 35% Sales Tax, 24% Sales Tax on diesel; Kerala – 30.08% Sales Tax on petrol, 22.76% Sales Tax on diesel; Madhya Pradesh – 33% VAT on petrol, 23% VAT on diesel.

Maharashtra is the only state in the country which is divided into two regions in terms of state taxes. One region of Maharashtra includes major urban metro cities of – Mumbai, Thane and Navi Mumbai. Whereas, the rest of state of Maharashtra has separate State taxes.

In Mumbai, Thane and Navi Mumbai there is 26% VAT plus Rs 10.12 per litre additional tax on petrol. For diesel there is 24% VAT plus Rs 3.00 per litre additional tax.

For the rest of Maharashtra there is 25% VAT plus Rs 10.12 per litre additional tax on petrol. For diesel there is 21% VAT plus Rs 3.00 per litre additional tax.

Manipur has the highest state tax rates on petrol and diesel in the country. The tax rates are as follows – Manipur – 36.50% VAT on petrol, 22.50% VAT on diesel; Meghalaya – 31% Sales Tax/VAT on petrol, 22.5% Sales Tax/VAT on diesel; Nagaland – 29.80% VAT on petrol, 17.50% VAT on diesel; Odisha – 32% VAT on petrol, 28% VAT on diesel.

In Punjab the tax structure on petrol and diesel is unique in the country. There is Rs. 2,050/Kilo Litre (KL) cess plus Rs. 0.10 per litre (Urban Transport Fund) plus 24.79% VAT plus 10% additional tax on VAT – on petrol. For diesel the tax structure in Punjab is as follows – Rs. 1,050/Kilo Litre (KL) cess plus Rs. 0.10 per litre (Urban Transport Fund) plus 15.94% VAT plus 10% additional tax on VAT.

In Rajasthan the tax rate on petrol is – 36% VAT plus Rs 1500/KL road development cess, on diesel it is – 26% VAT plus Rs 1750/KL road development cess and Telangana – 35.20% VAT on petrol and 27% VAT on diesel.

When it comes to maximum collection of Sales Tax/VAT in 7 major states for 9 months between 2020-21 for the period between 2014-15 to 2020-21 is as follows – Andhra Pradesh Rs 7,514 crore, Gujarat Rs 10,311 crore, Karnataka Rs 10,473 crore, Maharashtra Rs 16,962 crore, Rajasthan Rs 11,071 crore, Tamil Nadu Rs 11, 826 crore, Uttar Pradesh Rs 14,643 crore.

In terms of state wise collection of SGST/UTGST for 9 months between 2020-21 for the period between 2014-15 to 2020-21 is as follows – Assam Rs 158 crore, Gujarat Rs 935 crore, Haryana Rs 350 crore, Karnataka Rs 164 crore, Maharashtra Rs 601 crore, Odisha Rs 122 crore, Tamil Nadu Rs 290 crore, Uttar Pradesh Rs 418 crore and West Bengal Rs 269 crore.

For Kerosene distributed through the Public Distribution System (PDS) and Domestic LPG the GST rates for all the states and union territories is uniform 5.00% each for both Kerosene and Domestic LPG.

When it comes to annual industry sales of all petroleum products for the period between April 2008 to March 2020, the sales in 2019-20 for some major states is as follows – Haryana – 10222.8 metric tonnes (mt), Rajasthan – 10920.6 mt, Uttar Pradesh – 18407.2 mt, Assam – 2823 mt, West Bengal – 9308.5 mt, Gujarat – 22535.6 mt, Maharashtra – 20796.8 mt, Andhra Pradesh – 7699.3 mt, Karnataka – 13067.4 mt and Tamil Nadu – 14115.6 metric tonnes.

In terms of maximum consumption of petroleum products as on February 2, 2021 for the period between April 2020 to March 2021, maximum consumption is of High Speed Diesel (HSD) 58939 metric tonnes, Petroleum Coke 15065 mt, LPG 23074 mt, Motor Spirit (MS) 22755 mt and Naptha 11735 mt.