The Telangana government has no intention of cutting entry tax on fuel to bring prices at par with neighbouring Karnataka, which abolished the six per cent entry tax on fuel last year to check rising fuel prices.
Though the Centre has exempted petrol and diesel from GST, which came into force from July 1, 2017, Karnataka voluntarily withdrew the entry tax to bring prices down.
With this, fuel prices in Karnataka came down by six per cent, and consumers from Telangana in the areas bordering Karnataka have been buying fuel from petrol pumps in Karnataka, with petrol costing Rs 5 less per litre than it does in Telangana.
Telangana petrol pump dealers in bordering areas, too, are getting fuel from Karnataka at cheaper rates, and making higher profits thanks to higher sale prices in Telangana.
Consumers are now demanding that Telangana abolish entry tax to bring down the price of petrol, which is close to Rs 80 per litre, while the price of diesel has crossed the Rs 71 mark.
The Centre, too, has appealed to states to cut VAT rates and entry taxes to lower fuel prices. However, Telangana has refused to cut tax rates, arguing that VAT on petroleum contributes major revenue to the exchequer and the government will suffer huge financial losses if it is cut, and the government has argued that if the Centre is serious about lowering fuel prices, it should first cut excise duty.
Finance minister Etela Rajender said, “The state government cannot afford to lose revenue from taxes on fuel as it is implementing various welfare schemes that cost over Rs 50,000 crore per year. Besides, we are taking up several irrigation projects, Mission Bhagiratha, etc., for which huge funds are needed. After GST, almost all taxes being collected by the states have been abolished. Now, states can collect VAT only on fuel and alcohol. If this too is lost, we have to depend entirely on the Centre for funds. As it is, we have been asking the Centre for funds to complete Kaleshwaram project, Mission Bhagiratha, and Mission Kakatiya, and received nothing in three years.”