To offset the negative trend resulting from varying prices of petrol and to regularise the flow of funds coming through VAT to the State coffers from the sale proceeds, Harish Rawat Government fixed the base price on the sale of petrol. From now onwards, the State Government would collect Rs17 per liter or 25 per cent of the sale proceeds whichever is higher.
Things were decided on July 30 when the State Cabinet sat at Bhagwanpur, Haridwar. Things started being implemented from the intervening night of September 15 and16.
Talking to The Pioneer, the State chief secretary Rakesh Sharma said on Wednesday that in financial year 2013-14, they are getting Rs400 crore per annum from VAT on petrol. “With the price of petrol hovering between Rs70 and Rs76 per litre, the State is getting from
Rs17.5 to Rs19 per litre through VAT because the State Government is charging 25 percent VAT on such sales,” he said.
Over the past one year, prices of petrol has come down to Rs62 per litre, including Rs15.5 per litre by way of VAT. “With the price varying this way, the State’s income also varied correspondingly. The State Government thus decided to fix the base of the taxation structure.
From now onwards, the State Government would charge Rs17 per litre or 25 percent whichever is higher,” CS said.
Sharma further made it clear that the State Government has not increased the price of diesel nor has it fixed the base structure of VAT pertaining to sale of diesel. “The thing is applicable only to the sale of petrol,” he stated.
“As compared to the neighboring State Uttar Pradesh which is charging 31.8 percent, including 26.8 per cent VAT, along with five percent entry tax, the petrol price is still Rs two per litre cheaper in Uttarakhand than in UP,” CS said.
Ascribing the fluctuation in the price level to the same in that of crude oil, Sharma said certain mechanism must be in place to neutralize the negative impact of such frequent variation on the State’s coffer.
“Alarmed over the vacillating trend, the State Government decided to go for fixing the base price on petrol during Bhagwanpur cabinet meeting held on July 30. However, we took care not to have common people affected as we refrained from raising the price of diesel. Any hike in the price of diesel would have pushed inflation up, resulting in the prices of essential commodities spiral,” he said.
He also made it clear that they have not increased VAT on petrol too. “We have
just fixed its base price at Rs17 per litre. It means if you buy five litres petrol from any outlet located in Uttarakhand you have to pay Rs85 to the
State Government by way of VAT.
It would affect the
people’s pockets and at the same time, it would regularize the State’s income on the count of the fuel’s sale,” he said.
The State Government has also left its option of augmenting revenue open, he said. “Take for instance, the petroleum companies
are currently supplying petrol to Uttarakhand @ Rs50.21
per litre and after addition
of State base price, the
petrol pumps located here
are selling petrol @ Rs 67.21 per litre. If the price increases due to any reason and the petrol companies supply petrol @ Rs80 per litre then state would charge 25 percent VAT.
With this, the state would get Rs20 per litre by way of VAT. In case, the prices go down the state would charge Rs17 per litre as base fixed for VAT.
Things remain open for us as we have options, given the vagaries of the prices.
Our focus is trained on
augmenting revenue
without letting the prices burning holes in the common people’s pockets,” CS Sharma added.