Diesel cheaper in Delhi, govt slashes VAT to 12.5%

Last Updated: Friday, July 16, 2010 - 23:53

New Delhi: In a breather for Delhiites,
diesel will cost Rs 2.50 less per litre as Delhi Government
today rolled back Valur Added Tax (VAT) on the fuel from
existing 20 per cent to 12.5 per cent.

A litre of diesel will cost Rs 37.60 against the
current price of Rs 40.10. The new rate will come into effect
from July 20.

The decision to slash VAT on diesel, which was
increased to 20 per cent from 12.5 per in the state budget in
March, was taken at a cabinet meeting presided over by Chief
Minister Sheila Dikshit. Surprisingly, Finance Minister A K
Walia, who has been opposing any roll back, was not present in
the Cabinet meeting today.

Delhiites were shelling out Rs 40.10 per litre on
diesel after its prices were increased by Rs 2 by the Centre
on June 25.

After the Cabinet meeting, Dikshit said the decision
to slash the VAT on the diesel was taken after it was found
that the city government was losing on reveue from sell of
diesel as people preferred to buy the fuel from neighbouring
cities of Haryana where the rate was much less.

The decision will also help contain inflationary trend
and bring relief to the common man, the Chief Minister said.
Delhi Petrol Dealers Association (DPDA) have been
demanding a cut in VAT on diesel holding that sale of the fuel
had come down drastically after the tax was increased in the
budget. The VAT on diesel in Haryana is 8.8 per cent.

"The decision has been taken as we were losing on
revenue after the increase in VAT in last budget. People
preferred to go to Haryana to purchase diesel. That is why we
have decided to cut down the VAT on the fuel," Dikshit said.

The Chief Minister also said the Union Government has
already hinted that diesel prices will also be deregulated
like the petrol prices and the cut in VAT was "necessary".

In the last budget, the Delhi government had hiked VAT
on diesel from 12.5 per cent to 20 per cent increasing its
price by Rs Rs 2.37 more per litre.

Dikshit said the government has also decided to bring
down the VAT on dry fruits from 12.5 per cent to five per
cent. VAT was increased to 12.5 per cent from five per cent in
the Delhi budget.

Walia, while presenting the budget, had defended the
diesel VAT hike by citing examples of other states like Madhya
Pradesh and Punjab, saying that they charge a far higher VAT
on diesel than Delhi.

Meanwhile, the DPDA said the decision will bring the
much desired relief to the common man.

However, it renewed the demanded to bring parity in
VAT rates of diesel between Delhi and Haryana.

"There continues to be a gap of over 4 per cent in the
cost of diesel between the two states which is affecting our
sales," it said.


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First Published: Friday, July 16, 2010 - 23:53

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