States should cut VAT on petrol, diesel: Dharmendra Pradhan

New Delhi: Oil Minister Dharmendra Pradhan on Thursday asked states to follow the Centre's footsteps in cutting taxes on petrol and diesel and said auto fuel as also natural gas should be included in the GST to cut cascading effect of duties.

The Centre had earlier this week cut excise duty on petrol and diesel by Rs 2 per litre each to provide relief to consumers from three-month long relentless price hike.

"We have requested all the states (to cut VAT) and I and sure that all the states will revisit their tax structure. Consumer interest is top priority. Just like excise Duty has been cut by the Centre keeping consumer interest in mind, states would also follow suit," he said.

The Centre sacrificed Rs 26,000 crore in revenue in the cut in excise duty.

"This is not a political issue.... Keeping in mind the fiscal balance if the union government has revisited the tax structure then states should also do the same," he said.

The Centre had raised excise duty by Rs 11.77 per litre on petrol and Rs 13.47 a litre on diesel between November 2014 and January 2016 to take away gains arising from plummeting international oil rates.

It reduced excise duty on petrol to Rs 19.48 per litre from Rs 21.48 per litre and on diesel to Rs 15.33 a litre from Rs 17.33 previously.

Pradhan said petrol, diesel and natural gas should be included under Goods and Services Tax (GST).

"But this is not an administrative decision. GST Council will decide. Till the time it is included in GST, our expectations would remain," he said.

Before the excise cut, petrol price had risen by Rs 7.8 per litre since early July to reach over three-year high of Rs 70.88 a litre in Delhi while diesel rates had risen by Rs 5.7 to touch an all-time high of Rs 59.14.

BJP-ruled Maharashtra levies 46.52 percent VAT (47.64 percent in Mumbai) on petrol, the highest in the country. Andhra Pradesh has 38.82 percent VAT on petrol while BJP- governed Madhya Pradesh levies 38.79 percent VAT on the fuel.

BJP-led NDA governs 18 out of the 29 states.

Delhi and Himachal Pradesh levy 27 percent VAT on petrol while Punjab has 36.04 percent VAT. Haryana levies 26.25 percent VAT.