Kerala has not hiked tax on petrol, diesel in 6 years: Balagopal

Minister says PM’s stance on the matter is misleading and detrimental to the State's interests

Kerala has not hiked the tax on petrol and diesel even once in the past six years, Finance Minister K.N. Balagopal said on Wednesday, reacting sharply to Prime Minister Narendra Modi's criticism of States, including Kerala, for not reducing the tax on petrol and diesel.

Mr. Balagopal indicated that Mr. Modi's stance on the matter was misleading and detrimental to the State's interests. Instead of asking resource-starved States to slash their limited income source, the Centre should put a stop to collecting cess and surcharge on petrol and diesel, he said.

‘’Kerala has not hiked sales tax on petrol and diesel in the past six years. It is one of the few States which has not done so. So what is it that we should reduce? After the Left Democratic Front came to power, tax was reduced on one occasion. After that it was never increased and everyone knows that in the current scenario, we cannot even consider a hike. But people in responsible positions in the Centre are making statements which could mislead the public,” Mr. Balagopal said.

The State government will convey its stance on the matter to the Prime Minister and the Central government in addition to raising it at the relevant forums, he said.

Over the past several years, the Centre has frequently hiked the tax on fuel. From ₹7 in 2017, the Centre has hiked it to ₹31 now, he said.

The Centre is collecting cess and surcharge unfairly. In doing so, it is encroaching on the rights and powers of the States and violating the basic tenets of the Constitution, Mr. Balagopal said.

The Prime Minister should not have brought politics in the issue, he added.

On petrol, Kerala collects 30.08% as sales tax, ₹1 per litre as additional sales tax and 1% cess. On diesel, this is respectively, 22.76%, ₹1 per litre additional sales tax, and 1% cess.

On Wednesday, while interacting with Chief Ministers on the COVID-19 situation, Mr. Modi pinpointed several non-BJP-ruled States, including Kerala and Tamil Nadu, for not reducing value-added tax on diesel and petrol. While the Centre had reduced excise duties, some States did not reduce the taxes to ease the burden on the people, he said. 

Kerala govt announces tax cut on petrol by Rs 2.41, diesel by Rs 1.36

Kerala government announces cut in tax on petrol and diesel by Rs 2.41 and Rs 1.36 respectively," state Finance Minister KN Balagopal.  

Following a reduction of fuel prices by the Centre, the Kerala government on Saturday announced a cut in tax on the prices of petrol and diesel by Rs 2.41 and Rs 1.36 respectively.

"Kerala government announces cut in tax on petrol and diesel by Rs 2.41 and Rs 1.36 respectively," state Finance Minister KN Balagopal said.

Earlier on Saturday, in a significant step aimed at providing relief to people from high fuel prices, the Centre announced a reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre 

Making the announcement in tweets, Finance Minister Sitharman said that the move will have a revenue implication of around Rs 1 lakh crore per year. The minister, who made several other announcements aimed at curbing inflation said subsidy will be provided on cylinders under the Ujjwala scheme.

She urged states to also reduce VAT on petroleum products to give relief to the common man.

The government had similarly reduced excise duty on petrol and diesel in November last year on the eve of Diwali. It had reduced excise duty on petrol by Rs 5 a litre and on diesel by Rs 10 a litre.

The government data earlier this week showed that the wholesale inflation in India surged to 15.08 per cent in April from 14.55 per cent in the previous month due to a sharp jump in the prices of fuel, metal, food and non-food articles and chemical products.

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