Minister of State (Independent Charge) for Petroleum and Natural Gas Dharmendra Pradhan has said that the current price of fuel does not warrant an excise duty cut.

“We will consider a revision when needed," he told reporters at the sidelines of an event to release a report by IRADe on Converging ‘The Divergence Between Diesel and Petrol Prices: A Case for Rationalisation of The Central Excise Duty’.

According to the Report both the Centre and States need to rationalise their share of tax on fuel before petrol and diesel can be brought under the Goods and Services Tax regime. “If the states were also to equalise their Value Added Tax rates along with excise rates by the Centre, the combined impact on the change in diesel price varies from 6 per cent to 2 per cent across states,” it said.

It is difficult to arrive at an acceptable GST rate that protects States revenues due to varying tax incidence on fuel in the country, the report added.

The calls for lowering tax component on petrol and diesel follows a price rise of nearly ₹ 6 a litre in petrol (Delhi) and ₹ 3.68 a litre in diesel (Delhi) since July 1.

Pradhan, however, supported the Finance Minister Arun Jaitley's view urging the States for a cut in Value Added Tax component. He said, "State governments should consider a cut in their share of tax reveues from petrol and diesel."

The Finance Minister had written to State Chief Ministers urging them to reduce the incidence of VAT on petroleum products used as inputs in making of goods after the introduction of GST.

He had also requested States to explore the possibility of having a lower rate of VAT on petroleum products used for manufacturing of those items on which there is GST, so that there is minimum disruption in the pricing of goods.

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