Bharat Bandh, but Punjab evades tax cut

Ruchika M Khanna 

Tribune News Service

Chandigarh, September 10

Amid a nationwide protest led by the Congress against the high prices of fuel, the party’s government in Punjab finds itself unable to reduce the high taxes it charges on petrol and diesel. 

The state gets approximately Rs 27.85 as taxes on each litre of petrol (on Monday’s retail price of Rs 86.11-Rs 86.60 per litre) and Rs 10.41 per litre of diesel (from Rs 72.68 per litre that the consumer pays). The taxes include VAT, surcharge and 48 per cent excise duty on petrol that is returned by the Centre to the state.

Punjab has among the highest rates of VAT on petrol in the country, second only to Maharashtra and Andhra Pradesh. Official sources said last year, VAT collection from petrol and diesel stood at Rs 5,833 crore. This year, it is likely to go up to Rs 6,000 crore. 

“Thus, it is a major source of revenue for Punjab. The state government has enough responsibilities to fulfil in sectors like social welfare, agriculture, policing, health and education from its limited resources. 

There isn’t enough leg room to cut the taxes,” Finance Minister Manpreet Singh Badal said, adding that the government was keen on taking some burden off the backs of the common man. 

Punjab BJP chief Shwait Malik rued that the Congress was shedding crocodile tears on the issue, when it was itself unwilling to lower the taxes in the state. 

Gurmeet Monty Sehgal, spokesperson for the Petrol Pump Dealers Association, Punjab, too, said the state government should reduce its own taxes. “Punjab charges the highest tax in the region, which leads to people living in areas bordering Haryana, Chandigarh, Himachal Pradesh and Rajasthan getting their fuel from outside the state. Not only would lowering of taxes be a populist decision, it would increase the volume of the total sale,” he said.  

Countering this charge, Manpreet said the Union government had increased the excise duty by nine times in the past two years, besides setting aside a portion of this duty as special excise duty. “Of the Rs 19.39 per litre of petrol charged as excise duty by the Centre, they have set aside Rs 8 per litre as the special excise duty, thus giving lesser devolution of excise duty to states. The Centre should first slash the excise duty before throwing the responsibility on states to cut their taxes. The ideal situation would be to bring all fuels under the GST,” he said.