The cut in excise duty of Rs 8 per litre on petrol and Rs 6 per litre on diesel was effected totally in RIC.
On Sunday, Finance Minister Nirmala Sitharaman rebutted the Opposition’s criticism of excise duty cuts affecting states’ share of central taxes, claiming that the Rs 8 per litre cut in petrol and Rs 6 per litre reduction in diesel were made in the road and infrastructure cess levied on the two fuels, and that the collection on which was never shared with states.
Former Union Finance Minister P Chidambaram and other Opposition leaders first claimed that the excise duty decrease announced on Saturday evening will reduce the share of state taxes paid by the federal government.
On Sunday, Chidambaram amended his statement, claiming that the reduction in levies benefits only the central government.
Sitharaman said she is giving some important details about levies on gasoline and diesel for the benefit of everyone on Twitter.
“Basic Excise Duty (BED), Special Additional Excise duty (SAED),Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. Basic ED is sharable with states. SAED,RIC & AIDC are non-sharable,” she said.
The cut in excise duty of Rs 8 per litre on petrol and Rs 6 per litre on diesel was effected totally in RIC. This was the case even when the gas tax was slashed by Rs 5 and the diesel tax by Rs 10, she claimed.
According to the Centre-State Tax Sharing Formula, the states receive 41% of the taxes collected by the Centre. These do not, however, include collections from the cess levy. Cess accounts for the majority of the tax on gasoline and diesel.
Prior to Saturday’s decrease, the total incidence of central tax on petrol was Rs 27.90 per litre, although basic excise duty was only Rs 1.40 per litre. Similarly, basic excise duty on diesel was only Rs 1.80 out of a total government tax of Rs 21.80 per litre.
There was a special supplementary excise charge of Rs 11 per litre on petrol and Rs 8 per litre on diesel. The agriculture infrastructure and development cess (AIDC) was imposed on petrol at Rs 2.50 per litre and diesel at Rs 4 per litre.
Petrol had an additional excise charge of Rs 13 per litre in the form of RIC, while diesel had an additional excise duty of Rs 8. The excise reduction on Saturday reduced this. The states receive only Rs 1.40 per litre BED collected on fuel and Rs 1.80 on diesel. There is no sharing of the SAED, AIDC, or RIC.
“Basic ED which is sharable with states has not been touched. Therefore, the entire burden of these two duty cuts (made in Nov, 21 and yesterday) is borne by the Centre,” she said.
“The duty reduction made yesterday has an implication of Rs 1,00,000 cr a year for Centre. The duty reduction made in November’21 has an implication of Rs 1,20,000 cr a year for Centre. Total revenue implication to Centre, on these two duty cuts is thus Rs 2,20,000 cr a year.” Chidambaram had on Saturday evening stated that the cut in excise duty was “equal to rob Peter more & pay Peter less!” “FM’s exhortation to States is meaningless. When she cuts Central Excise by one rupee, 41 paise of that rupee belongs to the States,” he had stated.
On Sunday, he apologised for saying on Saturday that “the full burden of the decrease falls on the Centre.” To that extent, I accept my apologies.” According to RBI data, the Modi government spent Rs 90.9 lakh crore on developmental projects between 2014 and 22.
“In contrast, only Rs 49.2 lakh crore was spent on developmental expenditure during 2004-14.” “The expenditure incurred by our Govt under @PMOIndia @narendramodi includes Rs 24.85 lakh crore spent so far on food, fuel and fertiliser subsidies and Rs 26.3 lakh crore on capital creation. Over the 10 years of UPA, only Rs 13.9 lakh crore was spent on subsidies,” she added.
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