Why the states are grumbling

The structure of central levies on petrol and diesel needs a review followed by their inclusion in GST

The Union government’s decision last week to reduce the road and infrastructure cess on petrol and diesel has given rise to a debate over whether the states too should cut their value-added tax or sales tax they impose on these fuel items. The Centre’s expectation is that just as it has recognised the need to combat inflation by reducing the levies on petrol and diesel, which it had raised when the international crude oil prices were low, the states too should reduce their levies to bring down fuel prices.

The response from the states so far has been muted.