Petro price hike: win-win situation for Punjab govt | chandigarh | Hindustan Times
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Petro price hike: win-win situation for Punjab govt

chandigarh Updated: Sep 14, 2012 20:47 IST
Vishal Rambani
Vishal Rambani
Hindustan Times
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The Akali-BJP alliance might be holding protests against the Congress-led UPA government at the Centre over frequent petroleum price hikes, but the irony is that the Punjab government's value-added tax (VAT) collection has doubled in the past five years due to the dozen-odd hikes.


Punjab charges 28% VAT on petrol and 9.3% on diesel. These figures are among the highest in the country. A surcharge of 10% on VAT is also levied on petrol and diesel, while Re 1 per litre cess is imposed on petrol.

Every hike in petroleum prices not only gives the SAD-BJP coalition another opportunity to target the Centre but also fetches additional revenue in VAT collection.

Against a VAT collection of Rs 1,200 crore from petroleum products in the financial year 2007-08, the Punjab government is expecting almost Rs 2,500 crore in the current fiscal year. And that too without registering any similar growth in the sale of petroleum products. The daily sale of petrol and diesel in Punjab is pegged at 5,700 kilolitre (KL) and 9,500 KL, respectively.

Akali and BJP leaders on Friday launched a scathing attack on the Congress over the hike in diesel prices, but they kept mum on the consequent increase in revenue.

"The fresh hike will fetch the state Rs 130-150 crore annually. We will earn an additional at least Rs 60 crore in the remaining six months of the current fiscal," said GS Gill, deputy excise and taxation commissioner (VAT collection), Punjab. He said the state would cross the target of Rs 2,500 crore as far as VAT collection from the petroleum sector was concerned.

"The SAD-BJP government is shedding crocodile tears. Ultimately, it is the state government which benefits the most from the petroleum price hike," said Romi Mehra, a local petrol pump owner. He said the Punjab government should decrease VAT on petroleum products so as to stop consumers from buying fuel from the neighbouring state of Haryana.

Punjab's gains from petro products

Financial year VAT collection (in Rs)
2008-09 1,200 cr
2009-10 1,400 cr
2010-11 1,840 cr
2011-12 2,210 cr
2012-13 2,500 cr (expected)