Centre deprives over Rs 1.15 lakh crore towards States’ share from petroleum earnings

The union government registered about 186 per cent increase in its earnings from the petroleum sector between 2014-15 and 2021-22. The Centre's unjust policy to collect more revenue through cess rather than the form of taxes, has resulted in the States' revenue increasing by only 75 per cent

Hyderabad: The union government registered about 186 per cent increase in its earnings from the petroleum sector between 2014-15 and 2021-22.

But the Centre’s unjust policy to collect more revenue through cess rather than the form of taxes, has resulted in the States’ revenue increasing by only 75 per cent from the sector during the corresponding period. As a result, the States have been deprived of more than Rs 1.15 lakh crore revenue by the Centre in 2021-22 alone.

According to Article 271 of the Constitution, all the Central taxes and duties, except surcharges and cesses levied for specific purposes, should be distributed between the Centre and the States. To avoid giving the due share to the States in its revenue, the BJP government took advantage of this law and has been eating into the State revenues by imposing more cess and surcharges rather than the direct taxes.

As per the data furnished by the Petroleum Ministry, the union government earned Rs 1.72 lakh crore from the petroleum sector in duties and taxes in 2014-15, which rose to over Rs 4.92 lakh crore in 2021-22. During the same period, the contribution of the sector to the States increased from Rs 1.62 lakh crore to Rs 2.82 lakh crore i.e. 75 per cent. However, the gap between the revenues earned by the Centre and the States enhanced from Rs 12,000 crore to a whopping Rs 2.1 lakh crore.

Considering the fact that the Centre should devolve 41 per cent of the Central taxes to the States, the latter have been deprived of Rs 1.15 lakh crore revenue during the period. There has been no change in the State’s VAT (Value Added Tax) component of 35.2 per cent on petrol and 27 per cent on diesel during these eight years.

However, the Centre has imposed multiple cess taking overall tax component on petrol from 9.48 per cent to 27.9 per cent and diesel from 3.56 per cent to 21.8 per cent. The Central taxes consist of basic excise duty, special additional excise duty, commonly referred to as surcharge and road cess on a litre of petrol or diesel.

“Due to the Centre’s double standards and refusal to reduce the cess and surcharge component, Telangana alone lost over Rs 5,000 crore in 2021-22,” an official from the Finance department told Telangana Today.

It is now a known fact that the Centre has been depriving the States their legitimate share of 41 per cent in the Central taxes. Instead, the States’s share of the Central taxes have been restricted in the range of 29-32 per cent with increased collection of cess and other surcharges by the Centre. The same has been proved once again in revenue earned through the petroleum sector.