The Congress-led government in Maharashtra is not in a hurry to respond to the party high command’s call to reduce taxes levied on diesel and LPG cylinders. Instead, Chief Minister Prithviraj Chavan and his deputy, Ajit Pawar, clarified that any decision would be taken by the state cabinet only after carefully looking at the necessary numbers.
The Maharashtra government does not levy value added tax (VAT) on LPG cylinders but charges 23 per cent VAT on diesel. Of the total collection of sales tax/VAT of Rs 42,000 crore in 2010-11, about Rs 3,500 crore was through the VAT on diesel. There are about 3,300 petrol pumps in the state whose monthly diesel sale is about 600,000 kilolitre and 250,000 kilolitre of petrol.
“We are concerned about the hike in the prices of LPG cylinder and diesel. I discussed the issue with the deputy chief minister who is also the finance minister and the finance secretary. The state cabinet will take a decision only after looking at the necessary numbers,” the chief minister told Business Standard.
Pawar, who belongs to the Nationalist Congress Party, a key ally of the UPA at the Centre, clarified that in his budget for 2011-12 he had spared LPG from VAT. “There is no VAT on LPG cylinders. However, in the case of VAT on diesel, the government will examine.”
On West Bengal Chief Minister’s decision to cut four per cent VAT on LPG cylinder, saving Rs 16 for the Bengal consumer, Pawar said West Bengal could not be compared with Maharashtra.
“West Bengal was charging four per cent VAT on LPG cylinder which will not be collected. This would effectively put the burden of hike at Rs 34 and not Rs 50 on consumers in West Bengal,” he noted.
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Ravi Shinde, president of Petrol Dealers Association, Mumbai, said the government’s decision to increase diesel prices would put additional burden on auto fuel dealers.
“Dealers’ margin will reduce. Besides, the auto dealer, who does not have sufficient liquidity at his disposal, will have to raise working capital from banks for the procurement of diesel at the increased price. Further, the auto dealer will have to shell out money for the interest payment.”
He added that the dealers also faced a major problem of evaporation of diesel.
Meanwhile, responding to a call by the deputy CM, NCP workers staged statewide protests against the rise in the prices of LPG cylinder, diesel and kerosene meant for the public distribution system. Similar protests were organised by the Shiv Sena, BJP and Republican Party of India, which form the Opposition alliance in the state.