States want Rs 4,000 cr as fuel duty cut damages

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deviation by some states that they should impose at least 20% sales tax on petrol and diesel, Dasgupta said, "States are facing difficult, volatile times because of rising inflation and their responsibilities on expenditure front. We should allow states some time for adjustment (to 20% tax rate). This is not the time."

Some states are deviating from the floor rate principle of 20% on petrol and diesel. For example, Haryana is imposing 14% sales tax on petrol and 8.8% on diesel.

Dasgupta said while states get one-third of tax revenues, they incur 80% of developmental costs like those on health, education and roads. To bail out oil marketing companies, which are suffering losses due to surging global crude oil prices, the Centre had on June 5 announced a hike in prices of petrol, diesel and LPG by Rs 5 a litre, Rs 3 a litre and Rs 50 a cylinder, respectively.