EVEN AS the BJP-ruled states of Haryana and Himachal Pradesh Thursday announced a reduction in Value Added Tax (VAT) on petrol and diesel prices by Rs. 2.5 per litre, the Congress-ruled Punjab is yet to decide on how to reduce the soaring fuel prices. With the Centre also reducing the VAT on petrol and diesel by Rs. 2.5 per litre, a total reduction of Rs. 5 per litre in petrol and diesel will come into effect in Haryana and Himachal Pradesh from midnight.
In the region, petrol and diesel prices in Punjab are the highest when compared with Haryana, Himachal Pradesh and the Union Territory of Chandigarh.
Himachal Pradesh’s Chief Minister Jai Ram Thakur and Haryana’s Finance Minister Capt. Abhimanyu made the announcements this evening, after Union Finance Minister Arun Jaitley announced the reduction in petrol and diesel prices.
Welcoming the Centre’s decision, Abhimanyu said, “The state government has decided to reduce VAT on petrol and diesel by about Rs 2.5 per litre. The revised rates would be effective from today mid-night. After reduction, the revised rates of diesel in Haryana would be about Rs 71 per litre and petrol would be about Rs 79 per litre. This would cause an annual burden of Rs 1,920 crore on state exchequer”.
In Himachal also, after the reduction of Rs 5 per litre, diesel will be about Rs 70 and petrol will be priced at Rs 79.5.
In Punjab, petrol and diesel are likely to get cheaper by Rs 3 if the state government decides not to cut VAT. While Chief Minister Amarinder Singh has called a meeting of officials of the finance department and excise and taxation departmentFriday to take a decision, sources said the government would suffer a revenue loss of about Rs 200 crore after the Centre’s cut on excise duty as the VAT is levied on basic price and excise duty.
A government release said, “The meeting will assess the implication and impact of the Centre’s suggestion to states on reducing fuel prices. The CM spoke to Finance Minister Manpreet Singh Badal and has asked him to make a presentation on it. Decision will be taken after that.”
A government functionary said, “Only BJP states have announced to cut VAT. Has any other Congress state done it? BJP states have to follow what the Centre does. But Punjab is already cash-crunched and reduction in VAT will be detrimental for its fiscal health. Yet, we will take a decision only in the meeting Friday.
Punjab has the highest VAT on petrol in the northern region at 34.86 per cent and 16.62 per cent on diesel. It is cheaper only to Maharashtra and Andhra Pradesh. The price of petrol in Punjab on Thursday was Rs 89.70 and diesel was Rs 75.46.