Petrol, diesel to cost more

Chandigarh, June 15

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The state government increased the Value Added Tax (VAT) on petrol and diesel, effective midnight. This will lead to an increase in petrol price by Re 1- Rs 1.20 per litre and that of diesel by Rs 0.53 per litre.

The VAT on petrol has been increased from 23.30 per cent to 26.43 per cent and that of diesel from 15.15 per cent to 15.98 per cent. A notification in this regard was issued by the government late tonight.

The measure has been necessitated in order to increase the state’s falling revenue collections, mainly because of the Covid-induced lockdown.

“The hike will help us realise an additional Rs 250 crore to Rs 300 crore per annum,” A Venu Prasad, Financial Commissioner, Taxation, told The Tribune. It may be noted that the annual sale of petrol in Punjab is estimated at 120 crore litres and of diesel at 400 crore litre. The state earns Rs 4,000 crore per annum as VAT on fuel. It was in February last year that the government had reduced the price of petrol by Rs 5 and that of diesel by Rs 1 per litre. This was done in the hope that it would lead to an increase in volume of sale of retail fuel. However, according to official sources, it did not increase any volume in sales and the state lost over Rs 800 crore in revenue.

Gurmeet Monty Sehgal, spokesperson, Punjab Petroleum Dealers Association, said the move would lead to shift in business to neighbouring states and also encourage the smuggling of fuel, besides hitting the sale of automobiles in Punjab. — TNS