Jaitley rules out tax cut on fuel, rejects Chidambaram'

Amid mounting pressure on the Centre to cut excise duty on petrol and diesel to cut rising prices, Union Minister Arun Jaitley on Monday dismissed the idea, saying it will push India into "unmanageable debt".

Among others, former finance minister P Chidambaram had late last month claimed that the government had room to reduce the price of petrol by as much as Rs 25 per litre.

Jaitley also called Chidambaram's statement as a "trap" suggestion.

"Another distinguished predecessor of mine had stated that the tax on oil should be cut by Rs 25 per litre. He never endeavoured to do so himself. This is a "trap" suggestion. It is intended to push India into an unmanageable debt — something which the UPA government left as its legacy," Jaitley said in a Facebook post.

Jaitley's strongly-worded remark came close on the heels of rating agency Moody's sounding a note of caution that any reduction in excise duty on petrol and diesel may adversely affect fiscal deficit unless it is matched by a commensurate cut in expenditure.

The finance minister instead appealed to political leaders and opinion makers to honestly pay their taxes and help the government to reduce taxation on oil products.

"My earnest appeal, therefore, to political leaders and opinion makers is that the full and complete suggestion would be that evasion in the non-oil tax category must be stopped, and if people pay their taxes honestly, the high dependence on oil products for taxation eventually comes down. In the medium and long run, upsetting the fiscal maths can prove counterproductive," he said.

"As far as non-oil taxes are concerned, we are still far from being a tax-compliant society," he said.