Fuel tax cuts to impact states' kitty by Rs 44,000 cr in FY22: Icra

While the Centre has reduced the road cess component of excise duty which is not shared with states, the cut will bring down the VAT kitty by Rs 9,000 crore, rating agency says

Rating agency Icra has pegged the revenue loss to the states at Rs 44,000 crore from central excise duty and state-level value added tax cuts on petrol and diesel during the current financial year.

While the Centre has reduced the road cess component of excise duty which is not shared with states, the cut will bring down the VAT kitty by Rs 9,000 crore since the state tax is imposed on ad valorem basis, Icra chief economist Aditi Nayar said.

She also tentatively estimated the losses to the states at Rs 35,000 crore from VAT cuts. So far, 25 states