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TN slashes petrol prices by Rs 3 in excise duty, will cost Rs 1,160 crores to the exchequer

CHENNAI: MK Stalin led Tamil Nadu government has slashed petrol prices by Rs 3, in form of state excise duty which will cost the state exchequer Rs 1,160 crores annually as per the budget that was presented today.

Presenting the first budget after the new Dravida Munnetra Kazhagam (DMK) government swept to power in the recently held assembly elections, finance minister Palanivel Thiagarajan said that this will benefit nearly 2.6 core people in Tamil Nadu who use two-wheelers.

Retail fuel prices differ vary state to state since it is not under the Goods and Services Tax (GST) regime and each state levies local taxes such as value-added tax (VAT) and freight charges and since the past one year the retail prices have been constantly increasing and in some states, it has breached the Rs 100 per litre mark.

Thiagarajan blamed the central government for the steep rise in fuel prices saying that nowhere was the dilution of the spirit of federalism more apparent than in the taxation of petrol and diesel at the pump. "The overall Union levies on petrol were increased from Rs 10.39 per litre in May 2014 to Rs 32.90 per litre today," he said.

Earlier in March 2021 during the parliament session on the Finance Bill 2021, Bharatiya Janata Party (BJP) leader Sushil Kumar Modi had said in the parliament that it would not be possible to bring fuel prices under the GST regime for the next eight to ten years as it would cause an annual revenue loss of Rs 2 lakh crore to all states.

Modi said the Rajya Sabha that presently, 60 per cent tax is being collected on petroleum products and both centre and the states collectively collect over Rs 5 lakh crore tax on petroleum products, and if petrol or diesel would be brought under the GST regime then a maximum of 28 per cent tax would be collected on them as that was the highest slab in the tax regime.

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