The Hindu Business Line : TN cuts sales tax on diesel

Chennai, June 5 The Tamil Nadu Government has cut the sales tax on diesel by two percentage points representing a relief of about 60 paise a litre to the consumer.

According to an official press release, the State Government announced that the sales tax on diesel would be reduced by two percentage points. This would mean oil companies would have to pay 21.43 per cent sales tax – fuel oil comes under the non-VAT category – against the prevailing rate of 23.43 per cent levied on high speed diesel. Light diesel oil is taxed at 25 per cent.

Government officials and oil marketing companies estimate that this would mean diesel prices would come down by 60-65 paise a litre in Tamil Nadu. This would be implemented once the State Government officially notifies the oil companies.

Following the hike in fuel prices announced by the Centre on Wednesday, diesel went up by Rs 3.29 a litre and retails at Rs 37.73 in Chennai.

The press release said the reduction in sales tax would mean a revenue loss of Rs 260 crore to the State Government.

In June 2006, the Tamil Nadu Government had come out with a notification reducing the sales tax to 23.43 per cent from the then prevailing rate of 25 per cent. This costs the State Government a revenue loss of Rs 200 crore a year.

More Stories on : Policy | Taxation | Petroleum | Tamil Nadu

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