Chandigarh, June 26
In tune with the directions from the Centre to Chief Ministers in Congress-ruled states, the Haryana government today announced a waiver of 5 per cent value added tax (VAT) on kerosene.

While LPG has already been VAT-free in the state since June 2008, something that West Bengal Chief Minister Mamata Banerjee announced yesterday to offset the price hike, the Haryana Government is already taking a “big hit” financially by charging the lowest VAT in the country on diesel.

The Shironami Akali Dal government in Punjab and the Bharatiya Janata Party government in Himachal Pradesh, however, are mum on such a move so far even as protests over the hike in diesel and LPG prices gather momentum.

Taking the lead in slashing cess and local taxes to offset the impact of the hike on diesel and LPG prices, Chief Minister Bhupinder Singh Hooda said this decision would make kerosene cheaper by 70 paise per litre.

“The consumer in Haryana would have to pay Rs 14 per litre instead of Rs 14.70 per litre. The VAT on LPG had already been waived in June 2008, and now with the waiver on kerosene, Haryana becomes a VAT-free state for these two key items,” he said.

Hooda also hinted that the state government would take more steps to control price rise in the state. Among the steps being considered are effective implementation and monitoring of the public distribution system, availability of more pulses in the state, monitoring of prices of cereals, vegetables and oil.

The Chief Minister said the state was charging the minimum 8.8 per cent (9.24 per cent with surcharge) VAT on diesel, which was already the lowest in the country. The Central government, he said, had to increase the rates of petroleum products due to a hike in the global prices of oil.

While Gujarat has the highest VAT rate of 24.7 per cent on diesel, Punjab and HP are charging 9.68 per cent and 14 per cent, respectively. The VAT rate on diesel in Chandigarh and Delhi is 12.5 per cent, Hooda said.

Sources said VAT on diesel was a big source of revenue, contributing nearly Rs 1,500 crore to the treasury. However, if this rate were raised to the rate being charged in Gujarat, the state government would benefit by Rs 3000 crore every year. Maintaining that the state government had decided to waive VAT in keeping with the directions of Congress president Sonia Gandhi to minimise the burden on the masses, Hooda said the diesel rates in Haryana were also the lowest in the country.