Andhra Pradesh to slash sales tax on petroleum products

June 6th, 2008 - 12:49 am ICT by IANS  

A file-photo of Sonia Gandhi

Hyderabad, June 5 (IANS) Andhra Pradesh, which has the highest rate of sales tax on petroleum products, is likely to reduce the tax to give some relief to the common man. A cabinet meeting is likely to be held in a day or two to take a decision on reducing sales tax on petrol, diesel and cooking gas.

Finance minister K. Rosaiah told reporters here Thursday that a decision would be taken after Chief Minister Y.S. Rajasekhara Reddy returned to the state capital from Guntur district.

The chief minister left for Guntur this morning for a two-day visit but might cut short his visit in view of Congress president Sonia Gandhi’s direction to all party-ruled states to reduce taxes at the earliest.

“It is a major issue. It has to be discussed in the cabinet before we take a decision,” said Rosaiah.

He agreed that the hike in petroleum prices was unbearable for the common man. Rosaiah felt that the hike in gas price burdened housewives.

Expressing serious concern over the hike, the chief minister Wednesday appealed to the central government to reduce the price as far as possible. He said the hike would hit the common man and he would take up the issue with Prime Minister Manmohan Singh.

States like West Bengal, Bihar, Maharashtra and Kerala have already announced that they would slash taxes.

The price hike has been the highest in Andhra Pradesh as the rate of sales tax on petrol here is the highest in the country. The state levies 33 percent tax on petrol and 22.25 percent on diesel. The tax on cooking gas is four percent.

The government earned Rs.18 on every litre of petrol at the old rate of Rs.51.10. The revised price is Rs.56.65. The new price of diesel is Rs.38.25 against the old price of Rs.34.98 per litre. Cooking gas in the state will now cost Rs.354.42 while the old price was Rs.302.88.

The government earns Rs.45 billion from sales tax on petroleum products. This is the single largest revenue earner for the state, which has a total annual revenue of Rs.203 billion.

The government recently lowered the sales tax on aviation fuel from 33 percent to four percent. Officials said this was done as the volume of trade was low.

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