SRINAGAR: Jammu and Kashmir has one of the highest fuel cess rates in the country, with the latest data revealing that motorists in the Union Territory pay 24 per cent MST along with Rs 2 per litre employment cess on petrol. Diesel is taxed at 16 per cent MST and Rs 1 per litre employment cess. However, consumers receive a rebate of Rs 4.50 per litre on petrol and Rs 6.50 per litre on diesel. The tax structure in Ladakh differs significantly, with a 15 per cent MST and Rs 5 per litre employment cess on petrol, while diesel is taxed at 6 per cent MST and Rs 1 per litre employment cess, accompanied by specific reductions per litre.
The national picture, as outlined in a Lok Sabha response by the Minister of State for Petroleum and Natural Gas, Suresh Gopi, highlights that the Union Government levies an excise duty of Rs 19.90 per litre on petrol and Rs 15.80 per litre on diesel. Additionally, state governments impose Value Added Tax (VAT) at varying rates across the country. The data, sourced from the Petroleum Planning and Analysis Cell (PPAC), details how different states structure their taxation, with some states imposing additional road development cess and infrastructure charges.
The response further elaborates on how the revenue generated from fuel taxation is allocated. The proceeds contribute to various government initiatives, including the Pradhan Mantri Gram Sadak Yojana (PMGSY), the Pradhan Mantri Ujjwala Yojana (PMUY), Ayushman Bharat, the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), and funding for COVID-19 vaccinations.
In terms of revenue, the petroleum sector has made substantial contributions to the exchequer. During the financial year 2023-24, the sector contributed Rs 4,32,394 crore to the Central Exchequer, with excise duty alone accounting for Rs 2,73,684 crore. The total contribution, including to state exchequers, stood at Rs 7,51,156 crore. In the first half of 2024-25, provisional data suggests the total contribution from petroleum revenue stands at Rs. 3,39,185 crore, with Rs 1,83,319 crore directed to the central government and Rs. 1,55,866 crore to state governments.
While the taxation of petroleum products remains a significant revenue source, disparities in tax rates across states continue to affect fuel pricing. The government maintains that revenue from petroleum cess plays a crucial role in funding welfare and infrastructure development across the country. -(KL)
