HYDERABAD: The Central government’s recent decision to cut the excise duty on petrol by Rs 2 is going to cause losses to the tune of Rs 500 crore a year for the state government. Even as the state is rueing the loss, the Centre’s decision to give a paltry Rs 7 crore as GST compensation for July came as a shock.
According to official sources, for every Rs 1 reduction in rate, the state will make a loss of Rs 22 crore. The reduction of excise duty by Rs 2 will thus cause a loss of Rs 44 crore to the state government every month.
It means that the total loss to the state government in a year will be around Rs 528 crore, an official told Express on Saturday. The state government decided not to cut the VAT by 5 per cent on petrol and diesel as suggested by the Central government. “We are already suffering a loss of Rs 500 crore per year due to the Centre’s decision,” the official sources pointed out.
GST Compensation
However, the state got a partial relief of Rs 17 crore through GST compensation. The state government sought Rs 300 crore under GST compensation for July. Recently, the officials wrote a letter to the Centre requesting it to compensate Rs 300 crore. However, the Centre agreed to give Rs 7 crore for July as GST compensation. As per the base year of the GST, the Centre considered Rs 16,202 crore as state’s revenue and calculated the GST compensation to be Rs 7 crore. The state already got Rs 418 crore and Rs 669 crore as its share in GST for July and August.