Petrol, diesel get dearer by 90 paise in Punjab

In a statement, the government said: “The Cabinet gave its approval for a marginal increase in the VAT rate levied on the sale of petrol and diesel in the state. It will lead to a marginal increase in the price of petrol and diesel by approximately 90 paise per litre. This will bring more parity in prices of petrol and diesel in comparison with neighbouring states”.

Notably, with this move, which comes days before the AAP dispensation presents the state budget, the fund-starved government is looking to generate Rs 40 crore per month or nearly Rs 480 crore per year.

Earlier, in November 2021, three months before the February 2022 Assembly polls, the then Congress government, led by Charanjit Singh Channi, had lowered the VAT on petrol and diesel, making them cheaper by Rs 10 per litre and Rs 5 per litre, respectively.

In first reaction, Ashwinder Singh Mongia, an executive member of the Petroleum Dealers Association of Punjab, said that diesel was already much cheaper in some of the neighbouring states and the move will further widen the gap.

Mongia said the petrol and diesel rate in Mohali on Friday was Rs 97.11 per litre and Rs 87.44 per litre, respectively. After imposition of additional cess, petrol will cost just over Rs 98 per litre and diesel more than Rs 88 per litre in Mohali, Mongia said.

He said the fuel prices vary by 10 paise to 25 paise in different parts of the state depending on transportation costs.

Mongia said, on Friday diesel rate in Chandigarh was Rs 84.26 per litre, in Himachal’s Baddi it was Rs 84.67, in Jammu it was Rs 83.26, while petrol in Chandigarh was Rs 96.20 per litre, in Baddi it was Rs 95.26 and in Jammu, it was Rs 97.50 per litre.

He said the tax component on fuel in Punjab at present includes “existing cess of Rs 1.05 per litre on diesel and Rs 2.05 per litre on petrol, urban transport fund of 10 paise per litre and special infrastructure development fee of 25 paise per litre on both petrol and diesel”.

Specifically talking about diesel, he said the price gap with other states will encourage its smuggling.
Mongia, who is also president of the Mohali Petroleum Dealers Association, said before the polls, AAP had assured that if voted to power, they will make VAT on fuel at par with neighbouring states.

“Petroleum Dealers Association of Punjab had proposed to the AAP before last year’s polls that if they can make diesel prices alone at par with neighbouring states, the VAT collection will increase by Rs 1,000 crore per year,” he said.