The Hindu Business Line : Gujarat scraps VAT on LPG, cuts levy on petrol, diesel

Gandhinagar, June 10 The Gujarat Government today announced reduction of VAT on diesel and petrol by 3 per cent each and abolished the total VAT of 4 per cent on domestic LPG, thus bringing down prices of these products by Re 1 and Rs 1.38 per litre, respectively, and Rs 13.05 a gas cylinder.

Due to these measures, the total impact of revenue loss to the State Government will be Rs 1,450 crore, Ministers and Government spokespersons, Mr Jaynarayan Vyas and Saurabh Patel, said here. With the Union Government announcing a price hike recently, the diesel prices had increased by Rs 3.55 in Gujarat. The retail price of diesel in the State will now be down by Re 1/litre. The petrol price had increased by Rs 5.49, which will now be down by Rs.1.38/litre. Similarly, with the State Government abolishing the four per cent VAT on all domestic consumers, the price of LPG bottle will be less by Rs 13.05.

“The State Government expects the oil marketing companies of the Centre to pass on this benefit to the consumers with immediate effect. The loss on this account to Gujarat will be Rs 50 crore.” By this announcement, the State Government, apart from foregoing the additional VAT revenue of Rs 400 crore due to the recent price hike, has given additional benefit in the existing prices by Rs 130 crore.

Apart from this, the additional burden on the State Government, as a consumer in terms of increased expenditure in development works, comes to Rs 455 crore. Due to the benefit directly given exclusively to the oil companies in terms of tax reduction in customs and central excise by the Centre, the devolution of funds from the central pool, the State is likely to lose another Rs 470 crore.

Thus, the total impact of the price rise of petroleum products by the Centre and relief given by the State Government, the impact on the exchequer would be to the extent of Rs 1,450 crore, whereas the total impact of price rise on the State’s people would be nearly Rs 3,000 crore. The measures were announced following a four-member ministerial committee, headed by the Finance Minister, Mr Vajubhai Vala, submitting its recommendations on the issue.

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