Your diesel bill is set to shoot up by nearly 80 paise per litre in Punjab now. The cash-starved Shiromani Akali Dal-Bharatiya Janata Party government, on Saturday, hiked Value Added Tax (VAT) on diesel by 1.5%--up from the earlier 9.75% to 11.25%.
As the government also imposes a 10% surcharge on diesel, this means the VAT plus surcharge on diesel in Punjab is now 12.3%, while in neighbouring Haryana, the VAT on diesel is reportedly about 9.3%.
Government sources say with the increase in VAT and the recent Rs 1.50 hike in excise duty on petrol and diesel per litre each by the union government, Punjab government will earn about 93 paise per litre more.
This move is likely to help the state government mobilise over Rs 200 crore by the end of this fiscal.
Till Friday, diesel prices in Punjab were Rs 52.42 per litre while from Saturday, the revised rates were Rs 53.21 per litre.
Before taking the decision, functionaries of the state excise and taxation department held meetings with the Haryana government on Friday and tried to persuade the BJP government to increase the VAT on diesel and bring it on par with Punjab.
In case diesel prices in Haryana remain lower than the prices in Punjab, people residing in areas bordering Haryana would prefer purchasing diesel from there.
In fact, the Punjab government had unofficially approached the Chandigarh Union Territory (UT) administration with a request not to cut the VAT on diesel. However, the UT administration reduced the VAT on diesel from 12.5% to 9.68%.
According to Punjab government records, in Rajasthan, the VAT on diesel is about 18%, Jammu and Kashmir imposes near 14% VAT on diesel while in Himachal Pradesh, the rates are nearly 11%.
Meanwhile, Congress Legislature Party (CLP) leader Sunil Jakhar slammed the state government for the move, saying hike in VAT on diesel was “anti- farmer, anti- industry and ultimately an inflationary step.”
He said, “People of Punjab are now paying through their nose for bad and wasteful governance. The Akali-BJP government must explain if this is their idea of Acche Din.”
Post deregularisation, when the diesel prices were reduced, the Punjab government was losing about 50 paise per litre.
“With this hike, the government will neutralise losses and earn over 30 paise extra per litre on diesel,” a government functionary said.