Financial Daily from THE HINDU group of publications
Wednesday, Jun 14, 2006
Financial Daily from THE HINDU group of publications Wednesday, Jun 14, 2006 |
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Petroleum Industry & Economy - Petroleum States - Other States Delhi Govt waives VAT on petrol, diesel price hike Our Bureau
Break-up Petrol, diesel to cost less 67 paise and 22 paise per litre respectively. Currently petrol attracts a 20 per cent ST and 12.5 per cent on diesel. State governments are projected to garner Rs 48,800-crore revenue during 2005-06.
MR ASHOK WALIA
New Delhi , June 13 Petrol and diesel users in Delhi will get a marginal relief from the recent price hike with the Delhi Government on Tuesday deciding to reduce petrol and diesel prices by 67 paise and 22 paise per litre respectively. The price reduction would be effected by removing value added tax (sales tax) on the incremental price increase effected on the two products from the midnight of June 5. The Centre had announced an increase of Rs 4 and Rs 2 per litre respectively in petrol and diesel prices.
VAT factor
"We have decided not to charge the VAT component on the recent hike in petrol and diesel prices," Mr A.K. Walia, Delhi's Finance Minister, told reporters after a Cabinet meeting here on Tuesday. He also said that the reduced prices would become effective within a week and pointed out that certain procedures were to be completed. Currently, petrol attracts a sales tax of 20 per cent. For diesel, the sales tax stood at 12.5 per cent. The tax on petrol and diesel is administered through the Delhi VAT Act and, therefore, often termed as VAT even though the benefits of input tax credit are not available in transactions involving diesel and petrol.
State decision
Mr Walia said that the State would forgo revenue of Rs 102 crore through this decision. Currently, petrol price in Delhi stood at Rs 47.51 per litre and diesel Rs 32.47 per litre. With Tuesday's decision, petrol would cost Rs 46.84 per litre and diesel Rs 32.25 per litre. The Delhi Government's move comes at the behest of the Union Petroleum Minister, Mr Murli Deora. Sales tax/VAT on oil products are a big source of revenue for states, hence, many are reluctant to any cut in taxes on theseproducts. State governments are projected to garner revenue of Rs 48,800 crore during 2005-06. In 2004-05, the states had collected revenues of Rs 43,254 crore from this sector.
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