Year on, coffers swell, public suffers amid rising fuel prices in Punjab

Ruchika M Khanna

Tribune News Service

Chandigarh, June 28

The petrol in Punjab costed Rs 69.65 per litre and diesel Rs 61.37 per litre on May 1, 2020. A year later, the prices of petrol has zoomed to Rs 100.23 per litre and diesel to Rs 91.62 per litre in the state.

While this has hit the common man, businesses and agriculture sector, the state’s coffers have been swelling, thanks to the increase in tax collection. The state’s VAT collection too saw a dramatic jump between May 2020 and May 2021 — from Rs 501.66 crore to Rs 1,353.22 crore.

Though the VAT collection was impacted due to the Covid lockdown in 2020, the Rs 851. 56-crore jump in a year is largely on the account of the sharp rise in the fuel prices. Official sources in the Taxation Department accept that every Re 1 per litre increase in the price of the retail fuels adds Rs 0.30 per litre in their kitty as additional taxes.

As of today, when the retail price of petrol has touched

Rs 100 per litre in many cities like Mohali, Ropar, Pathankot and Gurdaspur, its basic rate is still Rs 39.65 per litre while it’s Rs 41.73 per litre for diesel. “The Central and state taxes imposed on the fuel are quite high. While the Centre imposes Rs 32.90 per litre as excise duty on petrol and Rs 31.80 on diesel, VAT on petrol is Rs 24.23 per litre and Rs 15.81 per litre on diesel. The tax on each litre of petrol is over Rs 57 and Rs 47.61 on diesel,” says Monty Sehgal of Petrol Pump Dealers’ Association, punjab

Moreover, with taxes in neighbouring states like J&K, HP, Haryana and Chandigarh being much lesser than Punjab, the retail price is cheaper by Rs 2-Rs 5 per litre. As a result, the sales of dealers, of those in border areas, have come down drastically.

Farmers are also likely to bear the brunt. Abjinder Singh Sangha, a farmer, says, “The prices of crops rise by barely Re 1 per kg, but the input cost (of diesel) has gone up substantially. These factors lead to huge losses.” 

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