Won’t cut VAT on fuel: Punjab Government

Ruchika M Khanna

Tribune News Service

Chandigarh, July 28

Amid the call to shut down petrol pumps for nine hours across Punjab on Wednesday in protest against the high Value Added Tax (VAT) charged on fuel, the state government has refused to roll back the tax.

VAT on petrol and diesel has been hiked twice during this financial year by the government — in May and in June. While the hike has led to an increase in the much-needed tax collection for the cash-strapped government, retail fuel pump owners, especially those in districts bordering Chandigarh, Haryana and Himachal Pradesh, said their sales had gone down drastically as people preferred to buy fuel from neighbouring states.

Petrol in Chandigarh is cheaper by Rs 5.02 per litre, in Haryana by Rs 4.43 per litre and in Himachal Pradesh by Rs 4.75 per litre. On the other hand, diesel in Chandigarh is cheaper by Rs 2.70 per litre, in Haryana by Rs 2.51 per litre and in Himachal Pradesh by Rs 3.86 per litre. “This disparity in prices has ensured a fall in the sales for retail fuel outlets in border districts. Unable to bear these losses, a petrol pump owner in Mohali committed suicide last week. To protest against this, we have decided to close down all retail outlets from 8 am to 5 pm on Wednesday,” Paramjit Singh Doaba, president of the Punjab Petroleum Dealers’ Association, told The Tribune.

Figures available from the Taxation Department reveal that the state earned Rs 707.20 crore as VAT on the sale of diesel and Rs 325.407 crore as VAT on the sale of petrol in June. With other sources of state’s taxes showing little signs of recovery, it would not be possible for the government to roll back the VAT hike.