Chandigarh, July 10
The Punjab government’s decision on reduction in the levy of value added tax (VAT) by 50 per cent on the hike in prices of petrol, diesel and LPG seems to be a mere eyewash.
With the new prices coming into effect from midnight, the retail price of petrol has come down by just 58 paise per litre, diesel by just 12 paise per litre and LPG by 95 paise per cylinder.
With minor changes because of levy of octroi on petrol, the new prices of petrol, to come into effect from this midnight will be Rs 54.99 per litre. The new retail price of diesel will be Rs 34.26 per litre, while that of the LPG will be Rs 345.85 per cylinder.
The decision to reduce the prices was taken by the Punjab Cabinet on June 12, a few days after the Centre had hiked the price of petrol by Rs 5 a litre, diesel by
Rs 3 a litre and LPG by Rs 50 a cylinder.
The reduced prices were not effected immediately as model code of conduct was in force in the state. Though the state government will lose Rs 75 crore per annum by granting this relief to the people, the reduction of VAT on the enhanced price of these petro-products is insignificant as compared to the neighbouring states of Haryana and Himachal Pradesh and union territory of Chandigarh.
Before the price hike on petro-products was announced last month, diesel was the cheapest in Punjab, which ensured that the sale of diesel in the state was the highest in the region.
With Haryana having reduced VAT on diesel from 12 per cent to 8.8 per cent, the retail price of diesel was reduced by Re 1 a litre. With the reduction in VAT in Punjab, the retail price of diesel in the state has come down by just 12 paisa per litre. As a result, the price of diesel in both states is the same.
J.P.Khanna, president of the Punjab Petroleum Dealers Association, while talking to TNS, said that if the government wanted to give relief to people, it should have reduced VAT on petrol and diesel, which is amongst the highest in the country.
“VAT, cess and octroi on petrol is almost 30.5 per cent. Comparatively, while no cess and octroi on petrol is levied in the neighbouring states, VAT is levied at the rate of 20 per cent in Haryana, 24 per cent in Himachal Pradesh and 22 per cent in Chandigarh,” he said.
Khanna added that by reducing VAT on petrol and diesel, the state government would have been able to plug the outflow of customers to neighbouring areas of Haryana. “This would have led to increased revenue for the state government. In Maharashtra, after the VAT on diesel was reduced last year, the outflow to neighbouring state of Gujarat was plugged, increasing the sales and leading to an additional revenue of Rs 800 crore,” he said.
