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Punjab, Haryana hike VAT on diesel


Chandigarh: Punjab and Haryana raised Value Added Tax (VAT) on diesel, negating the full benefit of Rs 2 per litre cut on fuel to consumers.

The step has triggered sharp criticism from the farming sector of both states.

While SAD-BJP led government hiked VAT on diesel to 13.4 per cent, the neighbouring BJP government in Haryana jacked up the tax to 16.4 per cent.

After adding local levies like cess and surcharge, the effective rate of tax on diesel in the two states will be 17.29 per cent and 17.22 per cent respectively.

The VAT on diesel has been hiked from 11.5 per cent (with surcharge 12.07 pc) to 16.4 per cent, a senior official of Haryana Excise and Taxation Department said today.

“VAT on diesel in Punjab has been raised from 11.25 per cent to 13.4 per cent. If we include cess (Rs 1 per litre) and surcharge (10 per cent on VAT), the effective tax becomes 17.29 per cent,” a senior official of Punjab Excise and Taxation department said.

After factoring in hike in tax and Rs 2 per litre cut in fuel by oil marketing companies, retail rate of diesel in Punjab dropped by Rs 1.25 per litre while in Haryana the price remains almost the same, dealers said.

The diesel rate in Punjab now prevails at Rs 50.41 a litre as against Rs 51.66 per litre before increase in tax. In Haryana, the new rate is Rs 50.10 per litre as against Rs 50.14 a litre, yesterday.

Notably, prices of petrol and diesel were yesterday cut by Rs 2 per litre by the oil companies.

The move comes in the wake of New Delhi, Punjab, Haryana, Himachal Pradesh and Chandigarh deciding to rationalise present tax regime by implementing a uniform tax structure  (UTS) with view to eliminate tax evasion and curb smuggling of goods through state borders.

However, fuel pump owners pointed out that unless UT Chandigarh raises tax on diesel, the full advantage of uniformity in tax regime among northern states would not accrue.

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