The entire revenue loss on account of reduction in excise duty on petrol and diesel by Rs 10 and Rs 5 a litre respectively will be borne by the Centre, a senior finance ministry official said on Monday.
"The entire reduction of Rs 10 and Rs 5 is a revenue loss to the central Government. And there is no loss of devolution to the states due to this reduction," Finance Secretary T V Somanathan told reporters here.
He said that this reduction would not result in states revenue loss on account of lower devolution. Currently, 41 per cent of tax collected is devolved with the states in 14 instalments.
The Centre on November 4 cut excise duty on diesel by Rs 10 a litre and by Rs 5 on petrol. Following this, as many as 25 states and Union territories have lowered value-added tax (VAT) on these fuels.