Cash-crunched Punjab is deferring decision on reducing its value-added tax (VAT) on petrol and diesel stating that out of Rs 2.50 cut on every litre of petrol and diesel by the Centre, Punjab would have to bear a loss of about Rs 1.37 on every litre.
Punjab Chief Minister Amarinder Singh, who held a meeting of Finance and Excise and Taxation Officers on Friday has reconvened the meeting in Delhi on Monday. He asked the officials to calculate the exact amount of loss the reduction in prices would cost to the state exchequer. He has also asked them to attempt a comparative analysis of petrol prices in Punjab vis-a-vis other states.
An official said petrol and diesel had become cheaper for the consumer by Rs 2.60 to 3.25 every litre after the Centre’s direction. He said out of the reduction of Rs 1.50 per litre on excise duty by the Centre, the state is set to lose 63 paise on every litre as the state have 42 per cent share in excise duty on fuel. The official said the Centre had passed on most of the burden on the states as it had not reduced the additional excise duty in which the states do not have any share.
He said out of a reduction of Re 1 on the base price of petrol, to be borne by the oil companies, the state is set to lose 33.80 per cent (VAT levied by the state on the base price). Also, the state has a share of 42 per cent on the income tax levied on the profit of oil companies. “This way, the state loses Rs 1.37 every litre.” said an official.
He said if Punjab follows BJP-ruled states that gave an additional cut of Rs 2.50 per litre, the state will have to bear a loss of Rs 1,300 crore.
Sources said the government was buying time as the Congress high command was also getting the matter studied by experts. “In any case, even if we reduce the prices, the credit will go to BJP. Why should it be done? And the state will lose money.”
Meanwhile, the Punjab Petrol Pump Dealers Association has threatened to go on a protest if the state does not reduce the prices. The Association, in a statement, said diesel would be costliest in Punjab compared to neighbouring states. They said earlier they had reconciled with the fact that petrol was costliest in the state and most of the drivers, on national and state highways avoided filling in Punjab. This led to dip in sales. “But now even diesel is becoming costlier. We cannot afford this much of loss.”