Five northern states, Chandigarh to meet for uniform VAT on petrol diesel
Haryana finance minister Capt Abhimamyu will be hosting his counterparts from neighbouring states of Punjab, Himachal, Uttar Pradesh and Delhi and union territory of Chandigarh on Tuesday.Updated: Sep 24, 2018 11:01 IST
With the BJP-led government at the Centre turning the heat on states to tame fuel prices, Haryana has taken the lead by inviting neighbouring states for fixing a uniform rate for value added tax (VAT) on petrol and diesel.
Haryana finance minister Capt Abhimamyu will be hosting his counterparts from neighbouring states of Punjab, Himachal, Uttar Pradesh and Delhi and union territory of Chandigarh here on Tuesday.
A senior official of Haryana excise and taxation department said the states will have to make collective efforts for uniform rate to avoid revenue loss in districts bordering states with lower tax.
Interestingly, opposition Congress in Haryana has been demanding that Abhimanyu slash VAT rates to provide relief to the common man while the Congress government in Punjab has been refusing to do so. Punjab finance minister Manpreet Badal has maintained that the state cannot afford to forego revenue from VAT on petrol, which is highest in north India.
For a uniform rate, Punjab may have to slash tax to bring it at a par with states bordering it as they may not agree to enhance their tax slab on petrol to 36%.
Some states may also have to hike the rate to ensure uniformity. After a similar meeting of FMs of northern states in 2015, the Aam Aadmi Party government at Delhi had hiked VAT rates as they were lower than Punjab and Haryana.
The VAT rates are highest in Maharashtra followed by Andhra Pradesh. In north, Punjab charges the highest VAT of 36% on petrol and 17% on diesel. Himachal charges 26% VAT on petrol and 15% on diesel. Chandigarh charges 19% on petrol and 11% on diesel and Haryana 26% on petrol and 16% on diesel.
The central government, which levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 on diesel, has been nudging states to cut VAT rates saying they get all of the VAT collection plus 42% of central excise collections.
Punjab has been demanding that the Centre bring fuel prices under the goods and service tax (GST) regime.
Till that happens, state’s petroleum dealers association has been demanding that Punjab government should lower tax slabs as they were benefitting neighbouring states.