Punjab cabinet meeting today; high fuel rates on agenda

Ruchika M Khanna

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Tribune News Service

Chandigarh, November 5

The Punjab Government is mulling reducing the Value Added Tax (VAT) on retail fuel, keeping in line with a decision taken by BJP-ruled states to reduce it.

The issue is to be discussed in the meeting of Council of Ministers, headed by Chief Minister Charanjit Singh, on Saturday, Finance Minister Manpreet Singh Badal told The Tribune.

Manpreet said the prices of retail fuel in the state, vis-a-vis the prices in Chandigarh, Haryana and Himachal Pradesh, would be discussed in the meeting before any decision on reducing VAT is taken. The Punjab Government earns an average of Rs 550-Rs 600 crore a month as VAT on fuel. For every Re 1 decrease in the price, the state will lose 30 paisa as VAT.

Petrol and diesel prices in Punjab are among the highest in north India, mainly because the VAT imposed by the state is the highest at 31.5 per cent for petrol and 19.5 per cent for diesel (including infrastructure development cess and other cesses and duties).

As a result, the price of petrol and diesel in the state is higher by an average of Rs 11 a litre and of diesel by Rs 8 a litre, as compared to the neighbouring states of Himachal Pradesh, Jammu and Kashmir and Chandigarh. “This is also leading to a lot of “consumer drain” from the border areas of Punjab to other states,” says Ashwinder Singh Mongia, president, Mohali Petroleum Dealers’ Association. Being an election year, the Congress government in the state has been drawing flak from the Opposition for the high taxes on fuel.