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Diwali gift: Chandigarh slashes VAT by 5%; petrol, diesel cheaper

Rs 2.7 drop in petrol price widens gap in tricity, to cost Rs 8 more in Mohali.

punjab Updated: Oct 18, 2017 11:01 IST
HT Correspondent
HT Correspondent
Hindustan Times, Chandigarh
Diwali gift,Chandigarh slashes VAT,petrol cheaper
This cut in VAT has also widened the gap in fuel prices within the tricity - Chandigarh, Panchkula and Mohali. (AFP)

Giving a pre-Diwali gift to residents, the UT administration on Tuesday slashed value-added tax on petrol and diesel by 5%. With this, petrol will become cheaper by Rs 2.74 per litre while diesel prices will see a drop of Rs 2.47 per litre when the clock strikes 12 on Tuesday night.

“It’s too little, too late. They are still paying what they paid when crude oil cost double.”

The move comes on the directions of the Union government to provide relief to consumers. Bharatiya Janata Party (BJP)-ruled states of Gujarat and Maharashtra were the first to announce a reduction in VAT on petrol and diesel, heeding the Centre’s appeal after it had cut the excise duty by Rs 2 a litre.

In Chandigarh, the tax has been reduced from 24.74% to 19.74% on petrol, and from 16.4% to 11.4% on diesel.

This cut in VAT has also widened the gap in fuel prices within the tricity. Both Punjab and Haryana have not slashed the tax rate yet. While a litre of petrol will cost Rs 65.66 in Chandigarh, it will be Rs 8 dearer in Mohali and Rs 2.5 in Panchkula (see box). Diesel too will be a couple of rupees cheaper in the capital city as compared to its satellite cities.

Raising concern over the wide gap in prices in the tricity, Mohali Petroleum Diesel Association president Ashwinder Singh Mongia said: “This will have a major impact on the sales in Mohali, Ropar and Panchkula. All business will shift to Chandigarh.” Mongia said it can lead to unscrupulous activities like smuggling of fuel.

“The slash in VAT rate has come as a major relief to Chandigarh residents.”

During protests by petrol dealers in Punjab last year, the Congress had promised to reduce VAT on a par with neighbouring states if voted to power.

Meanwhile, welcoming the move, Lok Sabha member Kirron Kher said slashing VAT will give relief to residents of the city. She said the Union finance ministry had recently asked all states and UTs to cut the VAT rate on petrol and diesel.However,former Union minister Pawan Kumar Bansal called it “too little, too late”.

“People are not concerned about the statistics, but the actual cost,” he said. “They are being made to pay as much as they were doing when the international prices of crude oil were double than today’s rates.”

Earlier, UT had proposed 4% cut in VAT. The excise and taxation department sent a proposal to administrator VP Singh Badnore, but he sought a detailed proposal based on VAT being imposed in other states.

First Published: Oct 18, 2017 11:01 IST