Even as the central government has decided to keep petrol and diesel out of the purview of the goods & service tax (GST), which will be implemented all over the country from April 2016, Himachal Pradesh is considering a proposal to bring value added tax on these fuels at par with those prevailing in neighbouring states.
In Himachal VAT on petrol is 27%, which is less than that charged in adjoining states, while on diesel it is 11.5. Several motorists prefer to tank up their vehicles at gas stations in nearby states, causing huge revenue losses to the already beleaguered exchequer.
Several state governments raised the issue of different rates of VAT on fuel at a recent empowered committee meeting of state finance ministers held in Kerala on May 7 and 8 to evolve a consensus on GST. Himachal excise & taxation minister Prakash Chaudhary proposed the move, which got the support of Delhi deputy chief minister Manish Sisodia, an official said. Principal finance secretary Shrikant Baldi, who attended the meeting, said he agreed with Himachal's proposal on all states levying uniform VAT on petrol and diesel. 15 state finance ministers and over two dozen senior officials from all states participated in the meeting, which was chaired by Kerala finance minister KM Mani.
A Himachal government official, requesting anonymity, said: "As petrol and diesel have been kept out of the ambit of the goods & service tax regime that will come into effect all over India next year, states should fix VAT rates on fuel on their own. Lower VAT rates in Punjab and Haryana have caused huge revenue losses to the state. If our VAT rates are brought on par with those being charged there fuel prices will be more or less the same everywhere."
VAT on petrol varies from state to state. In Rajasthan it is 30%, in MP 31%, in Haryana 21%, in Uttar Pradesh 26.8% and in Delhi it is 20%. VAT on diesel in Rajasthan is 22%, in MP 27%, in Haryana 12.07%, in UP 17.48% and in Delhi it is 12.5%.
Himachal earns revenues estimated at `500 crore from value added tax on petrol and diesel. In the GST regime there will be no entry tax on these products, dealing another blow to the state exchequer.