UP may cut trade tax rate on diesel

In a bid to leaven its growing anti-farmer image, which got bolstered in the process of land acquisition for Reliance Energy's power project at Dadri, the UP government is contemplating bringing down the trade tax rate on diesel from 22 per cent now, including the state development tax of 1 per cent, to 12 per cent.

Official sources, however, said the tax was proposed to be reduced for rationalising it and making it harmonious with the rates in nearby states like Uttaranchal, Delhi, Haryana, and Punjab.

Once the plan comes through, diesel is expected to be cheaper by over Rs 3.50 per litre in the state. However, there is no proposal to interfere in the present tax structure on petrol (25 per cent), kerosene (11 per cent), and LPG (5 per cent).

Official sources said here Chief Minister Mulayam Singh Yadav had given his approval. Officials are nowadays busy working out plans of coping with the financial losses, estimated to be about Rs 70 crore, and measures to reduce the gap.

Meanwhile, Uttar Pradesh Petrol Pump Dealers Association President B N Shukla said here that due to the high rate of trade tax on diesel, the sales of the product in UP had come down by 50 per cent. Also, the product is cheaper by Rs 3 per litre in the adjoining states of north India.

''The association has apprised the government about the anomaly in the tax structure and the harm caused to the UP government," Shukla said.

''The revenues of the government will go up because sales will go up after the price of diesel is rationalised," he said.