With both Punjab and Haryana raising VAT on diesel, the fuel has now become cheaper in UT Chandigarh compared that in the neighbouring states.
Diesel in UT Chandigarh now stands at Rs 52.94 a litre which is cheaper by about 44 paise as compared to price prevailing in Punjab and 25 paise a litre as against rates ruling in Haryana.
Price of diesel in Punjab and Haryana is about Rs 53.38 a litre and Rs 53.19 per litre respectively, fuel pump owners said.
Significantly, Union Territory Chandigarh had slashed VAT on diesel this month from 12.5 per cent to 9.68 per cent in order to bring parity with the tax rate in Punjab, thus giving a relief of Rs 1.40 per litre in diesel rates.
Punjab and Haryana had raised value added tax (VAT) on diesel.
SAD-BJP led government in Punjab had raised VAT on diesel by 1.5 per cent to 11.25 per cent with effect from November 15. Earlier, Punjab government had raised VAT on diesel by one per cent to 9.75 per cent with effect from October 1.
Punjab also levies 10 per cent surcharge on VAT rates.
As a result of Punjab government's move of raising VAT, the price of diesel jumped by about Rs 1.32 per litre. Notably, before raising VAT, diesel in Punjab was cheaper than UT Chandigarh.
Protesting against Punjab government's move of raising tax on diesel, state petroleum dealers had refused to purchase petroleum products on November 21, saying hike in VAT on diesel will hit sales in the state.
Manohar Lal Khattar government in Haryana yesterday announced raising VAT on diesel from 9.24 per cent to 12.07 per cent, increasing retail price of diesel by about Rs 1.15 per litre.
The price increase by BJP-led government in Haryana was expected to yield additional revenue of Rs 737 crore to the state exchequer.
The state government had claimed that even after increase in the rate of VAT on diesel, its price would be less as compared to rates prevailing in neighbouring states of Punjab, Delhi, Rajashtan and Uttar Pradesh, said an official release.
Haryana had cited revenue loss of Rs 23.50 crore per month because of decrease in retail price of diesel since October 1, 2014.
