States asked to lower duties on petroleum fuels

New Delhi, June 21 (IANS) In a bid to ease the burden of high fuel prices, Petroleum Minister Murli Deora has asked all states to reduce their levies on petrol and diesel, which at some places are as high as 33 percent.

Deora has also asked states to consider a shift from ad valorem duties to specific rates to moderate the impact of high global oil prices on the retail tariff.

‘Ad valorem rates of VAT (value added tax) imposed by the state governments further aggravates the impact of international oil prices on the consumer,’ Deora said in a letter to the chief ministers.

High VAT rates imposed by some states on kerosene and gas also need a review since these are the fuels used by the poor for purposes that range from lighting to cooking, the minister said.

He said the government should provide citizens fuels at affordable rates for which financial assistance of Rs.26,000 crore has been given to the public sector oil retailers.

This is in addition to Rs.14,430 crore that state-run oil exploration and refining enterprises have contributed to the oil retailing companies during 2009-10 towards under-recoveries, he said.

Annexing his letter to the chief ministers with a comparative statements of VAT imposed by various states, the minister said in some of them, the levy on petrol and diesel is as high as 33 percent and 24.7 percent respectively.

Deora said under ad valorem structure when oil prices are high, the taxation on the products is higher, rendering the product even more expensive.

‘To address this issue, the ad valorem component of the VAT can be converted into a specific component, at the current levels,’ he said.

‘Also, some of the states are levying high rates on a product like public distribution system kerosene, which needs to be looked into in view of its usage in lighting and cooking purposes by the common man.’

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