The Centre has done its bit by cutting customs and excise duties on crude oil and petroleum products. This is estimated to cost the exchequer Rs 22,660 crore. States are generally reluctant or not ready to cut the sales tax since all states together will lose Rs 6,911 crore as they get 30.5 per cent in the Centre’s total tax receipts. The total sales tax from petroleum products for all states stands at Rs 36,000 crore

According to sources in finance ministry, the empowered committee is scheduled to meet on June 16. With general elections just 11 months away, the committee chaired by Asim Dasgupta, Finance Minister in the CPI(M)-ruled West Bengal, will discuss if sales tax on fuel products — petrol, diesel and aviation turbine fuel (ATF) — can be further pared.

Many states impose cess and entry tax too besides high sales tax on petrol and diesel. Sales tax on petroleum products is among the easiest to collect and comprises 20-25 per cent of revenues for most states. Some states such as West Bengal, Delhi, Maharashtra, Tamil Nadu, Bihar and Orissa have already cut rates in the last two days.

Sources said there would be an effort to build consensus among states for categorising jet fuel as a declared good so that it attracts a uniform 4 per cent sales tax by all states. The Centre is pushing states to forego at least the incremental increase in sales tax revenues given the higher prices of fuel products now. This itself will bring down petrol price by Re 1 a litre and that on diesel by 50 paise.

Sources said four states - Madhya Pradesh, Chattisgarh, Karnataka and Orissa — levy entry tax on fuel products, and another four - West Bengal, Chandigarh, Punjab and Jammu & Kashmir — imposed cess. As many as 15 states and Union Territories levy sales tax of 25 per cent or more on petrol.