Macro Economy

Delhi petrol pump dealers seek lowering of Value Added Tax

Our Bureau New Delhi | Updated on June 04, 2020 Published on June 04, 2020

Automobile fuel dealers in the national capital have reported a 79 per cent dip in monthly diesel sales during May 2020, compared to May 2019. Despite the lockdown being eased, the drop is attributed a hike in Value Added Tax (VAT) on both diesel and petrol by the Delhi State government.

According to the Delhi Petrol Dealers Association (DPDA), the VAT hike is proving to be counterproductive as Delhi is losing both sales and revenue from auto fuels.

A statement from DPDA said that VAT on petrol and diesel was increased to the highest slab of 30 per cent on May 5, 2020. In April 2020, there was an 84 per cent sales drop in diesel compared to April 2019. Even with partial easing of lockdown in May, the sales drop is still at 79 per cent.

The neighbouring States of Haryana and Uttar Pradesh have recovered most of their diesel sales according to the DPDA.

“The primary reason for minimal recovery in diesel sales is the massive rate difference of around ₹ 7 per litre with neighbouring States resulting in Delhi losing its sales and revenue to the adjoining States. The vehicles bringing in essential commodities to Delhi were fuelling in Delhi till May 5, 2020. However, with such a rate difference these vehicles are now fuelling in neighbouring States. The calculations show a loss of revenue to the tune of ₹58 crore per month due to higher taxes,” said Nischal Singhania, past president of the DPDA.

The Association has written to the Delhi government seeking a reduction in VAT on petroleum products.

TABLE:

Diesel price difference between Delhi and neighbouring States

City

Diesel price (₹/litre)

Price difference

Delhi

69.39

Haryana

62.68

-6.71

Uttar Pradesh

63.45

-5.94

Punjab

63.30

-6.09

Uttrakhand

63.71

-5.68

Source: Delhi Petrol Dealers Association

Published on June 04, 2020
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