The Chandigarh Administration on Friday increased the Value Added Tax (VAT) on diesel from existing 9.68 per cent to 16.40 per cent in order to comply with the uniform tax structure in the region. This led to an increase in the price of diesel by Rs 2.77 per litre.
The move follows the decision of New Delhi, Punjab, Haryana, Himachal Pradesh and Chandigarh to rationalise present tax regime in order to eliminate tax evasion and curb smuggling of goods through state borders.
On Thursday, both Punjab and Haryana revised their VAT rate on diesel, thereby pushing their retail prices.
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Since VAT rate on diesel was the lowest in Chandigarh, the UT administration raised it substantially in order to bring prices on a par with neighbouring states.
With the new tax regime, diesel price in Chandigarh has increased from existing Rs 47.63 per litre to approximately Rs 50.40 per litre with immediate effect, which is now almost on a par with that of Mohali (Rs 50.41 per litre) and Panchkula (Rs 50.33 per litre).
Adviser to Administrator Vijay Kumar Dev told Newsline that VAT on diesel was increased in view of the region’s uniform taxation policy. “The idea is that commodities should be available to citizens broadly at the same price,” he said.
Asked if the move would hit the local residents hard, he said that disparity was more harmful to society at large due to smuggling and tax evasions.
He added that parity in taxation would be followed in petrol prices too. Chandigarh again has the lowest retail price for petrol.
In case the region moves for parity in petrol prices, rates here can go up by Rs 6-8 per litre. Sources said that deliberations had already been held among the states on parity in petrol prices and the final decision was soon expected.
On Thursday, the price of diesel was cut by Rs 2 per litre by oil companies but the increase in VAT in Chandigarh has negated the full benefit passed by companies to consumers.
The Mohali Petroleum Price Association welcomed the move. Its president Ashwinder Mongia said with parity in diesel prices in the Tricity, there would be a level playing field for all the petroleum dealers in the region.
Amandeep Singh, general secretary of the Chandigarh Petroleum Dealers’ Association, said though the move would hit the common man, parity in price would lead to competition and better services. “Let the people decide now where they get best services,” he said.
The local administration has kept the revised VAT on diesel a little lower than neighbouring states since the basic landing price of the diesel is a little higher in Chandigarh due to inter-state purchase. The effective rate of tax on diesel in Punjab and Haryana is 17.29 per cent and 17.24 per cent respectively whereas it is 16.40 per cent in Chandigarh.