Tamil Nadu announces tax cut of Rs 3 per litre on petrol

Presenting his maiden budget to the state assembly, Tamil Nadu finance minister Palanivel Thiaga Rajan, said the government has decided to cut tax on petrol by Rs 3 per litre. “I am happy to inform the house that this government has decided to reduce the effective rate of tax on petrol by Rs 3 per litre and thereby provide major relief to the toiling working class people in the state. This measure will result in a loss of revenue of Rs 1,160 crore, a year,” the finance minister said.

The ruling DMK, among other assurances, had promised in the run-up to the April 6 assembly polls that it would reduce prices of petrol and diesel by Rs 5 and Rs 4 respectively. The main opposition AIADMK has been demanding that the DMK fulfil its poll promises on the fuel price.

Tamil Nadu has 2.63 crore two wheelers, the most popular mode of transport for the working poor. They feel the pinch of the rising cost of petrol, he said, adding that the Union government was solely responsible for the increase in cost of the fuel and has benefited tremendously from the increase in taxation on petroleum products at the cost of the states.

Rajan said nowhere was this dilution of the spirit of federalism more apparent than in the taxation of petrol and diesel. The overall Union levies on petrol were increased from Rs 10.39 per litre in May 2014 to Rs 32.90 per litre in August 2021. Similarly, the levies on diesel were increased from Rs 3.57 in May 2014 to Rs 31.80 currently. Even as the Union government’s cesses and surcharges were increased, basic Union excise duty was brought down sharply. In 2020-21 even as the revenue to the Union government from petrol and diesel went up by 63% from the figure in 2019-20, the share of the states declined sharply. Hence, the onus of providing relief to the final consumers of petrol and diesel lies with the Union government, he added.

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