Petrol, diesel to cost more in Punjab, govt imposes 90 paise VAT

Tribune News Service

Chandigarh, February 3

In a bid to go for additional resource mobilisation, the Punjab Government has decided to impose an additional duty of Rs 0.90 per litre on Value Added Tax (VAT) for both petrol and diesel, making retail fuels expensive for the common man.

As a result, the price of petrol in the state will go up to Rs 87.44 for diesel and Rs 97.11 per litre, as would be the case in Mohali. Based on local taxes, the rates of fuel vary in different districts. Petrol prices in Punjab would be the highest amongst states north of Delhi and diesel prices would be second only to Haryana. The new rates will come into effect after the agenda approved by the Cabinet has been notified in a day or so.

This is the first ever exercise aimed at resource mobilisation by the AAP government ever since it came to power. The last time the rates were revised and lowered was in November 2021 by the then government.

Finance Minister Harpal Cheema told The Tribune that the decision to impose the additional duty on fuels had been approved by the Council of Ministers headed by CM Bhagwant Mann. “It is a minor increase, but will help the state garner additional resources for building better infrastructure,” he said, adding that in spite of the hike, the fuel rates would remain lower than the rates in Haryana and Rajasthan.

The move, however, has not gone down well with the retail fuel dealers in the state. Monty Sehgal, spokesperson of Petrol Pump Dealers Association, Punjab, said that the hike would divert the retail fuel consumers in border districts to Chandigarh, HP and J&K. The government will not earn much, as quantum of sales in districts bordering these states will fall, he added.

With the imposition of this additional duty, the state government hopes to generate an additional Rs 500 crore per annum as revenue, around Rs 40 crore per month.

It may be mentioned that though Punjab’s revenue collection between April-December 2022 is higher than last year - at Rs 60,095.69 crore, the figure is still short of the target of Rs 95,378.28 crore for the ongoing fiscal.

Even the sales tax (mainly VAT collected on fuel) is Rs 4,346.43 crore in the first three quarters against a target to collect sales tax of Rs 6,250 crore for the 2022-23 financial year.

Minor increase

• “It is a minor increase, but will help the state garner additional resources for building better infrastructure,” said Finance Minister Harpal Singh Cheema
• He said the rates would still be lower than the states of Haryana and Rajasthan

Revenue deficit

• The revenue deficit has already shot up, exceeding the targeted deficit for the entire year.
• Against a target of Rs 12,553.80 crore, the deficit in first nine months of the fiscal is Rs 15,348.55 crore.

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