Rolling backing the tax cuts it announced in October 2018 on fuel, prior to the Lok Sabha polls, the Uttar Pradesh government on Monday announced an increase in VAT on petrol and diesel, making them costlier by ₹2.35 and 98 paise per litre respectively from Monday/Tuesday midnight.
According to a notification issued by principal secretary, commercial tax, Alok Sinha, here, petrol will now be taxed at the rate of 26.80% or ₹16.74 per litre, whichever is greater, while VAT on diesel will be 17.48% or ₹9.41 per liter, whichever is more.
Diesel and petrol are outside GST and hence the state government has the power to revise VAT on it.
The move will bring an additional revenue of around ₹3,000 crore to the government exchequer during the remaining financial year.
“After VAT on diesel and petrol was reduced last year, we had been suffering huge revenue loss, which was around ₹3,100 crore crore between April and August 2019. Now, the tax revision is expected to make up for the loss by the end of the current financial year in March, 2020,” commercial tax commissioner Amrita Soni told the HT over phone.
She said the revised rates were only slightly higher than what they were when VAT was reduced on petrol and diesel last year.
{{/usCountry}}She said the revised rates were only slightly higher than what they were when VAT was reduced on petrol and diesel last year.
{{/usCountry}}Responding to the Centre’s appeal to states, the UP government reduced diesel and petrol prices by ₹2.50 per litre in October 2018 to provide relief to people.
The VAT received from diesel and petrol are the major sources of the government’s income and it accounted for around 25% of the total GST and non-GST revenue earned by the commercial tax department.
President of the Lucknow Petroleum Dealers’ Association Ranjeet Singh said, “We have been communicated about the increase in tax on petrol and diesel.
“The price of diesel is expected to increase from ₹64.36 to ₹65.35 per litre and that of petrol from ₹71.30 to ₹73.85,” said Singh.