No rollback on VAT rate for diesel, LPG

The Delhi government's demand for a reduction in the value-added tax rate on diesel and LPG from 20 per cent is unlikely to be met. This is because the empowered committee on the VAT says that all states will be persuaded to increase the duty on petroleum products to 20 per cent.

"There is no chance of any rollback on petroleum products. In fact, we will try to convince the governments in the neighbouring states like Punjab and Haryana to levy 20 per cent tax on these products," member secretary of the empowered committee Ramesh Chandra told Business Standard.

Delhi Finance Minister AK Walia said on Saturday the lack of uniformity in rates was a matter of concern. "That is why we have asked them to make sure that the rates are equal, otherwise allow us to reduce our rates," he said.

Chairman of the empowered committee Asim Dasgupta does not agree with the view that petrol and diesel should be treated like other additional excise duty (AED) items and not be put in the 20 per cent tax category.

"Petrol and diesel are not entirely marketable commodities as prices of these are administered till now," he said.

The Delhi government has complained that 20 per cent tax on diesel and LPG has resulted in about a 50 per cent fall in sales, as the neighbouring states are still continuing with lower rates.

Haryana and Punjab, however, are not very keen on raising the rates to 20 per cent. During his recent visit to the Capital, Haryana Chief Minister Bhoopinder Singh Hooda told Business standard that the state government was not considering any hike in the tax rates looking at the interest of the farmers.

At present Punjab levies 8.8 per cent tax on diesel, while in Haryana it is 12 per cent. Uttar Pradesh, however, taxes diesel at a higher rate of 22 per cent.