Oil firms neutralise VAT hike on petrol, diesel

Petrol and diesel prices were on Wednesday cut by `2 per litre, excluding local levies, in the second reduction of rates this month by oil companies, but the petrol would actually become costlier in the national Capital due to an increase in VAT rate here. The decrease in diesel prices would also be less in Delhi due to a hike in Value Added Tax (VAT) by Arvind Kejriwal-led Aam Aadmi Party Government.

The new rates announced by the oil marketing companies became effective from Wednesday midnight. While, the reduction in petrol and diesel prices was reflective of local trends, the consumers in Delhi will not be able to get the benefit as the Arvind Kejriwal Government raised VAT on the two fuels robbing city customers of the reduction.

While the rates will reduce by a bigger number all over the country, petrol price in Delhi will go up by 28 paise a litre after considering local Government’s decision to hike VAT or Sales Tax on the fuel from 20 to 25 per cent.

Similarly, diesel rates will fall across the country. In case of Delhi, where the VAT on the fuel has been raised from 12.5 per cent to 16.6 per cent, there will be smaller reduction of 50 paise per litre. Petrol in Delhi will cost Rs 66.90 per litre from tomorrow instead of Rs 66.62 at present. A litre of diesel will cost Rs 49.72 per litre as against Rs 50.22 earlier, Indian Oil Corp (IOC), the nation’s largest oil company, said.

“Prices of petrol and diesel were last revised w.E.F. 1st July’15. Since last price change, there has been a decrease in international prices of both Petrol & Diesel. INR-USD exchange rate has also appreciated during this period. Combined impacts of both these factors warrant the said downward revisions,” it said.

Price of petrol was last cut on July 1 by 31 paise per litre and diesel by 71 paise a litre. “Since last price change, there has been a decrease in international prices of both petrol and diesel. Indian rupee-US dollar exchange rate has appreciated during this period. Combined impact of both these factors warrants a downward revision in prices, the impact of which is being passed on to the consumers with this price decrease,” IOC said.

The July 1 reduction in petrol prices came on back of three successive increases since May. In case of diesel, the July 1 cut was the second reduction in rates since June.Prior to that auto fuel rates were last revised on June 16 when prices of petrol were hiked by 64 paise a litre but diesel rates were cut by Rs 1.35 per litre.

State-owned fuel retailers IOC, Bharat Petroleum Corp (BPCl) and Hindustan Petroleum Corp (HPCl) revise petrol and diesel prices on 1st and 16th of every month based on average imported cost and rupee-dollar exchange rate in the previous fortnight.“The movement of prices in international oil market and Rupee-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes,” IOC statement added.