States will take call on sales tax cut after receiving response: VAT Panel

Our Bureau

VAT Panel queries


The manner

in

which basic price has been calculated by the Petroleum Ministry in the last three years.

Whether the

Centre contemplates any excise duty cut on petrol and diesel.

The extent of

gains attained by the Centre in terms of revenue as a result of price hikes.

New Delhi, June 15

Putting the issue of sales tax cut on petrol and diesel back in the Centre's court, the VAT Panel on Thursday said that the States would take a call on this matter only after it obtains certain information on the pricing and taxation front from the Union Government.

The VAT Panel has now raised three queries on the pricing and taxation front. This includes the manner in which basic price has been calculated by the Petroleum Ministry in the last three years, whether the Centre contemplates any excise duty cut on petrol and diesel and the extent of gains attained by the Centre in terms of revenue as a result of price hikes.

On June 5, the Centre had hiked the price of petrol and diesel by Rs 4 and Rs 2, respectively.

Soon after the recent price hike, the Union Petroleum Minister, Mr Murli Deora, had written to chief ministers of States requesting them to reduce sales tax/value added tax on petrol and diesel and forego their revenues on the incremental price hike. It was felt that cut in sales tax would cushion the burden of the consumer.

The Empowered Committee of State Finance Ministers on VAT, which has representation from all States, met here on Thursday and discussed the issue of reduction in sales tax on petrol and diesel.

They unanimously concluded that the Centre should furnish certain information on the pricing and taxation front for the VAT Panel to take an appropriate decision.

"Unless we get information about how the basic price has been determined, how much the Centre has gained as result of price increase in terms of revenues, and whether any central excise duty cuts are contemplated, we cannot express our views on the matter," Dr Asim Dasgupta, Chairman of the Empowered Committee, told newspersons after the meeting.

The VAT Panel now wants the Centre to provide information on how the basic price of both petrol and diesel has been determined by the Petroleum Ministry over the last three years in relation to movement of international crude prices and the way domestic and international crude prices have been factored into the basic price.

Asked whether there was any move to make petrol and diesel "vatable", Dr Dasgupta replied "not that we know of". He pointed out that prices of both petrol and diesel are still not market determined.

The VAT Panel Chairman, however, said that the committee would stick to the uniform floor rate of 20 per cent for petrol and diesel.

Simplify VAT procedures

Meanwhile, Dr Asim Dasgupta said that the VAT Panel has decided to simplify the VAT return forms and accounting procedures and make them comparable among States.

He also said that cumulative revenues of VAT-implementing States increased by 23 per cent in the first two months of the current fiscal.

(This article was published in the Business Line print edition dated June 16, 2006)
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