Nirmala Sitharaman rejects Opposition’s criticism of excise duty cut

Nirmala Sitharaman rejects Opposition’s criticism of excise duty cut

Finance Minister Nirmala Sitharaman rebutted the Opposition's criticism of excise duty cut that affects share of states in central taxes, saying that the Rs 8 a liter cut in petrol and Rs 6 reduction in diesel have been done in road and infrastructure cess levied on the two fuels, collection on which was never shared with states.

The reduction in excise duty announced on Saturday evening would reduce the share of states in central taxes, according to the former union finance minister P Chidambaram and then other Opposition leaders.

Chidambaram said on Sunday that the cut in the levies is only applied to the central government.

Sitharaman posted some useful facts on the levies on petrol and diesel on Twitter for the benefit of all.

Excise duty BED Special Additional Excise Duty on Special Excise Duty on SAED Road Infrastructure Cess RIC and Agriculture Infrastructure Development Cess AIDC together form Excise Duty on petrol and diesel. Basic ED is sharable with states. She said that RIC AIDC and SAED are non-sharable.

The excise duty reduction of Rs 8 per litre on petrol and Rs 6 a litre on diesel has been made in RIC. She said that even in November 2021 when petrol tax was cut by Rs 5 and diesel tax by Rs 10 was the case.

41 per cent of taxes collected by the Centre go to states, according to the centre-state tax sharing formula. These do not include collections from the levy of cess. The majority of the tax on petrol and diesel is made up of cess.

The central tax on petrol prior to Saturday's cut was Rs 27.90 per liter, but the basic excise duty was only Rs 1.40 a liter. The basic excise duty on diesel was only Rs 1.80 out of the 21.80 litre total central tax on diesel.

A special extra excise duty of Rs 11 a litre on petrol and Rs 8 per litre on diesel was levied. A Rs 2.50 a litre agriculture infrastructure and development cess, AIDC was levied on petrol and Rs 4 per liter on diesel.

Petrol commanded additional excise duty of 13 a litre in form of RIC and Rs 8 of such tax was levied per litre of diesel. This has been cut in Saturday's excise reduction. Only Rs 1.40 per liter BED collected on petrol and Rs 1.80 on diesel are shared with states. The RIC, AIDC and SAED are not shared.

Basic ED, which is sharable with states, has not been touched. She said the entire burden of these two duty cuts made in Nov. 21 and yesterday is borne by the Centre.

The duty reduction made yesterday has an impact of 1,00, 000 cr a year for the Centre. The duty reduction made in November 21 has an impact on the Centre's economy of 1,20, 000 cr a year. The total revenue implication to the Centre is Rs 2,20, 000 cr a year. Chidambaram had stated on Saturday night that the cut in excise duty was equal to rob Peter Peter more money, according to Chidambaram! FM's exhortation to States is meaningless. When she cuts Central Excise by one rupee, 41 paise of that rupee belongs to the States, he had stated.

He retracted saying that the entire burden of the reduction falls on the Centre contrary to what he had said on Saturday. I am corrected to that extent. Sitharaman said that the total development expenditure incurred by the Modi government during 2014 -- 22 was Rs 90.9 lakh crore.

During the year 2004 -- 14, only Rs 49.2 lakh crore was spent on developmental expenditure. The expenditure incurred by our Govt under PMOIndia narendramodi includes Rs 24.85 lakh crore spent on food, fuel and fertiliser subsidies and Rs 26.3 lakh crore on capital creation. She said that only over the 10 years of the UPA, only Rs 13.9 lakh crore was spent on subsidies.