HYDERABAD: The recent excise duty hikes on fuel saw the centre taking all the flak, but most states have done pretty much the same.
In March and May, when the Ministry of Petroleum and Natural Gases hiked fuel taxes, 23 out of the 36 states and union territories increased state taxes, but without hitting national headlines.
It's also a myth that the centre pockets all the gains from excise duty hikes.
Truth is, states are significant beneficiaries too. That's because, states' fuel taxes are ad valorem, or imposed on total transaction value. So every time excise duties are up, states' landed price of petroleum products rises, leaving little room or need to increase VAT. Still, that's what states did this year.
One may argue that the increase in 2020 was to tide over the slack in state tax collections. If so, this exception equally applies to the centre too, sans criticism. Interestingly, tax hikes were visible, though not pronounced, last year too when some states jacked up sales tax following excise duty hikes.
This year, among all, the sharpest increase on VAT -- 3% or more -- came from Rajasthan, Arunachal Pradesh, Delhi, Goa, Karnataka, Manipur, Mizoram, and Punjab. Nagaland was the only state that introduced a new Covid Cess of Rs 5 and 6 for every litre of petrol and diesel respectively. Some states even continued the trend until last month, although the increase in levies was minimal.
Rajasthan saw the steepest increase with VAT on petrol jumping from 30% during March to 38% now, while VAT on diesel rose from 22% to 28%. It was also one of the few states that raised VAT last year too following the centre's duty hike in July, 2019. If in June 2019, VAT on petrol and diesel stood at 26% and 18% respectively, they rose to 30 and 22% subsequently.
In Delhi, VAT on petrol shot up 3% from 27% as on March 2020 to 30% now, diesel taxes saw a maniac increase first but were brought down shortly thereafter. From 16.75% VAT on diesel as on March, it was nearly doubled to 30% in May, hours after the centre's excise duty rise, only to be corrected back to 16.75% a month later.
Goa raised its VAT by 4% between March and June, while Karnataka's hike stood at 3% for both petrol and diesel.
Maharashtra too increased, though it was technical with VAT remaining untouched, the state hiked additional charges by Rs 3 per litre of petrol and diesel.
Punjab's VAT on petrol increased from 20.11% prior Mach to 23.3% in May and now stand at 24.79%. Similarly, diesel taxes too jumped from 11.08% to 15.94% now.
If Gujarat preferred to sit out in the March-May hike cycle, it bucked soon after with VAT going up to 20.1% from 17% on both petrol and diesel.
On the other hand, states like Kerala, West Bengal, and Telangana didn't raise fuel taxes at all in 2020, while others like Andhra Pradesh, Uttar Pradesh, Uttarakhand, and Assam, didn't particularly jack up VAT, but marginally increased other levies.