While the UPA and their allies-ruled states such as West Bengal, Tamil Nadu, Delhi and Maharashtra cut sales tax rates immediately, among the NDA its and allies-ruled states only Bihar has so far cut the sales tax. Sales tax on petroleum products is an important source of revenue for most states. Many states, besides the sales tax, also impose cess and entry tax. Congress chief Sonia Gandhi, according to sources, spoke to all party CMs on phone and told them to lower sales tax. BJP chief Rajnath Singh too asked the CMs of seven BJP-ruled states to provide some relief to the “aam aadmi”.

Congress-ruled Delhi announced a sales tax cut and subsidy on LPG, saying the Rs 50-hike in LPG rate would be reduced to a Rs 10 increase. It, however, did not cut sales tax on petrol and diesel which stands at 20 per cent and 12.5 per cent, respectively. The subsidy would cost the state Rs 165 crore a year.

DMK-ruled Tamil Nadu decided to reduce sales tax on diesel by 2 per cent, a move that would entail an annual revenue loss of Rs 260 crore. It also did not cut sales tax on petrol and LPG at 30 per cent and 4 per cent, respectively.

Bihar issued an ordinance reducing sales tax on both petrol and diesel by 2.5 per cent and 1.64 per cent, respectively. Maharashtra cut sales tax on petrol and diesel by 2 per cent each to 25 per cent and 23 per cent, respectively. It waived off the entire 4 per cent VAT on LPG. The cuts will cost the exchequer Rs 730 crore annually. Punjab, Uttar Pradesh, Himachal Pradesh and Uttarkhand came down heavily on the Centre for raising fuel prices. While UP chief minister Mayawati said her state would not mind cutting sales tax rates, she did warn of a nationwide stir if the Centre did not roll back the hikes. Uttarkhand chief minister B C Khanduri said 95 per cent of total taxes on fuel products went to the Central kitty, and ruled out any tax cuts. Himachal CM Prem Kumar Dhumal said his state was taxing diesel by only 14 per cent compared with most states that had a sales tax of 20 per cent on it. “There is no plan to cut sales tax further,” he said.

Kerala said it would cut sales tax rates once its finance minister returned from tour. Though Karnataka’s BJP chief minister B S Yeddyurappa initially ruled out any cuts, another minister V S Acharya said the state would take a call during the Budget session that will start in the first week of July. While sales tax in Karnataka is 25 per cent on petrol products, the total revenue is approximately Rs 3,200 crore per annum. Karnataka can afford 2.5 per cent cut in sales tax without considering inflation and upsetting revenues, say officials.

At any rate

Some states have cut fuel prices, some have not, and some are yet to make up their mind.

They did

State Tax cut

Tamil Nadu 2 per cent

West Bengal 5 per cent

Delhi 4 per cent

Maharashtra 2 per cent

Tripura NA

Bihar NA

Andhra Pradesh Yet to decide

Gujarat Yet to decide

They won’t

Himachal Pradesh, Uttarkhand, Punjab

They may or may not

Karnataka, Kerala, Uttar Pradesh