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Gujarat government’s earnings from VAT on fuel cross Rs 14,000 crore

The government has witnessed a spike in revenues from VAT on fuel, despite slashing the tax twice in 2017 and 2018 by a total of seven percent. In October 2017, the state government ahead of the state Assembly elections, pulled down the VAT rates on fuel by four percent to 20 percent.

Written by Avinash Nair | Ahmedabad | December 21, 2019 1:09:39 am
 Ahmedabad news, Ahmedabad city news, Gujarat VAT revenue, VAT Gujarat 2018-19, indian express news According to the data tabled in the state Assembly, the revenue from diesel rose by 60 percent during the last four years, and the income from petrol rose by 56 percent.

Despite Value Added Tax (VAT) rates being slashed twice in the last four years, the Gujarat government’s revenues from VAT rose by 59 percent and crossed Rs 14,000 crore in 2018-’19.

In the past four years, the state government’s revenue from VAT imposed on petrol and diesel rose from Rs 8,819 crore in 2015-’16, to Rs 14,001 crore in 2018-’19, the state government stated in a written reply to an unstarred question asked by Congress MLA from Rajula, Ambareesh Der during the fifth session of the state Assembly which concluded last week. The revenue of the state government during the current year till June, 2019, is already Rs 3,510 crore.

The government has witnessed a spike in revenues from VAT on fuel, despite slashing the tax twice in 2017 and 2018 by a total of seven percent. In October 2017, the state government ahead of the state Assembly elections, pulled down the VAT rates on fuel by four percent to 20 percent.

A year later in October 2018, the government slashed the rates again by another 3 percent, after the Central government advised state governments to chip in with tax cuts. Currently, for every litre of petrol or diesel bought by a customer, 17 percent of VAT and an additional 4 percent cess is applicable. The government had last increased the VAT rates in January 2016, when the tax on both the fuel were raised to 24 percent and the cess was raised to 4 percent.

According to the data tabled in the state Assembly, the revenue from diesel rose by 60 percent during the last four years, and the income from petrol rose by 56 percent. Apart from the VAT on petrol and diesel, the state government also imposes 15 percent VAT on CNG (Compressed Natural Gas) and PNG (Piped Natural Gas). During this four-year period, the revenues from tax on CNG rose by 28 percent to Rs 411 crore, while that on PNG fell by 30 percent to Rs 702 crore.

When asked why VAT revenues from PNG were showing a reverse trend, Milind Torwane, Secretary (Economic Affairs), Finance Department told The Indian Express, “I do not have the exact details on hand, but the fall in revenues could be associated with fluctuating prices of PNG. Secondly, there would be a number of industrial users of PNG who would have shifted to other fuels like coal depending on the price variations.”

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