CHENNAI: Tamil Nadu Finance Minister Palanivel Thiaga Rajan urged the Centre on Thursday to eliminate cesses and surcharges on petrol and diesel and restore to 2014 rates, a fair and easy gesture.

"We have frequently urged the Union government to cut cesses and surcharges and integrate them with basic tax rates so that States receive their fair share of the Union tax proceeds," Rajan added. He was replying to Prime Minister Narendra Modi's request for states to decrease their gasoline VAT "in the spirit of cooperative federalism" on Wednesday.

Modi also mentioned the central government lowering the price of fuel and diesel by Rs 5 and Rs 10 per litre, respectively.

Finance Minister said that because Tamil Nadu imposes 'ad Valorem taxes that are imposed after Central taxes, the Centre's decision will cost the state an additional Rs 1,050 crore in annual revenue.  "Given that the Union Government's levies remain exorbitant, additional tax reductions by the State Government are neither fair nor practical." In the "true spirit of cooperative federalism," he hoped the federal government will respect this fair request.

He said that after Modi entered the office for the first time in 2014, the Centre's petrol taxes have increased significantly, pointing out that the basic price of petrol was Rs 48.55 per litre on August 1, 2014, and the basic price of diesel was Rs 47.27 per litre on August 1, 2014. The basic price of petrol was Rs 48.36 per litre on November 4, 2021, while diesel was Rs 49.69 per litre.

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