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BENGALURU: The Karnataka government is unlikely to slash sales tax on petrol and diesel , political pressure notwithstanding.Earlier this week, the Centre had reduced excise duty on petrol and diesel by Rs 2 a litre and asked states to follow suit and decrease sales tax by 5%. The BJPruled Gujarat, which is going to polls soon, promptly announced a 5% cut in sales tax on the two fuels. More states, at least those ruled by the BJP , are likely to follow.

“We are not in a position revise the tax structure, given the revenue losses the state has suffered due to GST. The rates are not likely to change at least till the end of the current fiscal year,“ said ISN Prasad, additional chief secretary (finance). BJP leaders said Union finance minister Arun Jaitley is likely to write to the Karnataka govenrment to reduce the tax on motor fuels . Sources in the ruling Congress admitted the government is under pressure to take steps make petroleum products cheaper in Karnataka ahead of the 2018 assembly polls but chief minister Siddaramaiah has made it clear he will not oblige.

“The Centre has to reduce the excise duty further instead of putting pressure on states,“ Siddaramaiah said at a media interaction on Thursday. Karnataka's argument is that the Centre has hiked the excise duty on diesel by over 380% since the BJP came to power in May 2014, pushing up the central levy collected per litre from Rs 3.56 to Rs 17.33 per litre.The excise duty on petrol was Rs 9.48 per litre on April 1, 2014 and has gone up to Rs 21.48, a 120% jump. Considering the fall in crude oil prices from $102 per barrel in April 2014 to $48 per barrel now, the excise duty cut is too meagre, officials in the state finance department argue.

“The Centre has revised excise duty on fuel 11times in three years. While the Rs 2 reduction is too less, a lot more needs to be done from their side before asking us to do our bit," said an official.

Karnataka has hiked sales tax on motor fuel thrice after the Congress came to power in May 2013 -from 23% in April 2013 to 24% in 2014, 26% in April 2015 and 30% in April 2016. “The Centre and states have to take up the responsibility . The Centre has to reduce duty by at least Rs 8," said M Prabhakar Reddy , chairman, All India Petrol Dealers Association.

GST the panacea

Reiterating the need to bring petrol and diesel under the GST ambit, experts say even the highest slab of GST will bring down the price of petrol to Rs 39.71 per litre and that of diesel to Rs 38.92. “The Centre and states are seeking to postpone GST imposition on fuel as they are worried about revenues," said B T Manohar, chairman, taxation committee and team GST, FKCCI.

