Fuel price hike helps Telangana swell its coffers

Hyderabad: Fuel prices which hit a four-year-high in April are worrying motorists and transporters, but the state government has got richer by crores of rupees because of the corresponding increase in VAT (value added tax) collection. Fuel prices increased consistently in the 2017-18, which ended on March 31.   The state government earned a whopping Rs 9,000 crore through VAT on petrol and diesel.

TS collects high VAT on fuel: 35.2 per cent on petrol and 27 per cent on diesel. The Centre’s request to bring down VAT to lower fuel prices was turned down by the state government on the ground that it would suffer losses. Oil marketing companies supply fuel for just '30 per litre but due to various taxes imposed by both by the Centre and state governments, consumers end up paying over Rs 70 per litre for diesel and '78 for petrol.  

These taxes include Central excise duty, state VAT, Octroi, cess and commission for petrol pump owners. The TS government earned a total of Rs 42,076 crore through commercial taxes in 2017-18, a growth rate of 19.42 per cent over 2016-17.   Of this, taxes on fuel alone contributed Rs 9,176 crore. Taxes on fuel stand next only to liquor as big revenue earners.   Liquor contributed the highest tax revenue of Rs 10,542 crore to the state exchequer.  

Though the Goods & Services Tax introduced last year replaced VAT, states were permitted to retain VAT on fuel and liquor, the big revenue earners for state governments.  In Telangana, half of the total taxes are earned through VAT on fuel and liquor.  Leaving fuel and liquor aside, the TS government earned just '6,540 crore through state GST and '6,534 crore through IGST.