Odisha govt authorises finance dept to increase tax on fuel

With Odisha sustaining revenue loss of Rs 417 crore per annum due to fall in the price of petrol and diesel, the state cabinet today authorised the finance department to recoup the shortfall by increasing VAT on fuel as and when required.
"The cabinet today approved a proposal authorising the finance department to enhance the rate of VAT on petrol and diesel as and when necessary with approval of the Chief Minister," Chief Secretary A P Padhi told reporters.
He said due to gradual fall in the price of crude oil in international market and deregulation of prices of petrol and diesel, there was a declining trend in prices of fuel, which affected VAT and Entry Tax collection.

"There is decrease in collection of VAT and Entry Tax amounting to Rs 838.16 per kilo litre on petrol and Rs 1334.51 per kilo litre on diesel as on date, in comparison to December 15, 2014," the Chief Secretary pointed out.
The Centre, on the other hand, enhanced Basic Excise Duty, Additional Excise Duty/Special Excise Duty and cess from Rs 9,476 to Rs 19,360 per kilo litre of petrol, registering a hike of tax by 104.30 per cent, he said.
Similarly, the Centre also enhanced Basic Excise Duty, Additional Excise Duty/Special Excise Duty and cess from Rs 3,563.80 to Rs 11,830 per kilo litre of diesel by which there was a hike of tax by 231.95 per cent, Padhi said.

Replying to a question, he said the VAT rate on petrol and diesel was increased from 18 per cent to 20 per cent on June 18, 2014 and from 20 per cent to 23 per cent on December 25, 2014.
Therefore, he claimed, the state's finance department needs to have flexibility to increase or decrease the tax rate on petrol and diesel.