M A I N   N E W S

Diesel dearer as Punjab raises VAT
Ruchika M Khanna
Tribune News Service

Chandigarh, November 15
Diesel prices in Punjab are up by 77 paise as the state government on Saturday increased the VAT by 1.50%.

The VAT on diesel in state was 9.75% till now. After the revision, it stands at 12.3% (9.75% + 1.50% + 10% surcharge). The diesel price in Punjab will now be Rs 53.14 per litre.

The SAD government decided to hike the VAT on diesel despite stiff resistance from its coalition partner, the BJP. The saffron party had been demanding a VAT cut on diesel at the joint coordination committee meetings of the two parties.

Official sources said the VAT has been hiked as state's tax collections from diesel have fallen by Rs 225 crore in this fiscal. Diesel process had fallen by Rs 5 after the Union Government had deregulated the fuel last month. On October 2, the Punjab Government had increased the VAT on diesel from 8.75% to 9.75%. "We are moving towards having a VAT structure very similar to Delhi, where VAT charged on diesel is 12.5%," said a senior government official.

Officials say with every Re 1 per litre fall in price of diesel, the loss in VAT collection to the state was 10 paisa per litre. An average of 2.77 lakh kilolitres of diesel is sold in Punjab each month. The Punjab Government earns Rs 3,000 crore per annum as VAT on sale of petrol and diesel.

With the fresh hike, Punjab will have the highest VAT on diesel in the region.