THIRUVANANTHAPURAM: The state’s tax revenue from diesel sales has declined by 3.21% after the implementation of the social security cess on fuel sales. The state government introduced the cess, Rs 2 per litre of diesel and petrol, in the 2023-24 budget to mobilise funds for the social security pension payment.
However, tax revenue from diesel sales dipped from Rs 4,103.86 crore in 2023-24 to Rs 3,971.94 crore in 2024-25 (both figures until January) following the cess implementation. Meanwhile, the decline is attributed to inter-state transport and cargo operators buying fuel from other states. Following the decrease in tax collection, the government had directed the taxes department to look into tax evasion by way of illegal smuggling of fuel into the state. In subsequent checks, the department identified evasion of about Rs 500 crore.
Despite the checkings, illegal sales are rampant in the state, according to the Federation of All-India Petroleum Traders (FAIPT). Diesel is brought to the state through the legal route and then sold illegally, said FAIPT state secretary R Sabarinath. “The GST department issues temporary permits to contractors or businesses who wish to transport diesel to the state for some particular work like the national highway development. They bring excess quantities and illegally sell the fuel to vehicle owners,” he said.
According to Sabarinath, such sales can be prevented if the GST department assesses the fuel required for a particular work and issues permits for the required volume. After the implementation of the cess, inter-state operators started depending on pumps in other states. “They can save about Rs 4 per litre if fuel is purchased from other south Indian states and up to Rs 10 if it is bought from Mahe. There is a considerable decline in the sales during the Sabarimala season after the cess implementation,” he said.
Meanwhile, the tax revenue from petrol sales saw a 2.72% increase in 2024-25. The collection rose from Rs 4,997.21 crore in 2023-24 to Rs 5,133.36 crore in 2024-25 (both figures until January).
The cess revenue, however, is quite inadequate for social security pension payments. The collection stood at Rs 954.32 crore in 2023-24 and Rs 797.19 crore in 2024-25. The government requires about Rs 900 crore for pension disbursal a month.