Hyderabad: The centre had urged all the states to cut VAT by 5% percent to reduce the ongoing prices of petrol and diesel in order to ease the customers. However, Telangana and AP governments are in no mood to cut VAT on petrol and diesel to enable further reduction in fuel prices as sought by the Centre.
The centre had reduced the excise duty on petrol and diesel by Rs 2 earlier. Maharashtra, Telangana and Andhra Pradesh are the states that collect the highest tax through petrol and diesel in the country.
As per a report by Deccan Chronicle, the two governments cited revenue loss caused to state exchequer on account of GST for not cutting VAT on fuel.
The VAT on fuel remains the major source of income for Telangana and Andhra Pradesh. Out of Rs 60,000 crore taxes, the TS earns Rs 25,000 crore every year, as the VAT on fuel.
TS officials say, the reduction in fuel prices by over Rs 2 per litre due to excise duty cut by Centre on Tuesday would alone cause around Rs 3,000 crore loss to TS as it imposes VAT on total price and it cannot afford to lose revenue further by reducing VAT on fuel as GST already caused over Rs 400 crore loss in the first month.