The Arvind Kejriwal Government is contemplating reducing Value Added Tax (VAT) on diesel from 18 per cent to 16.6 per cent owing to a drop in tax receipts from the sale of the fuel.
The decision was taken after a delegation of Petrol Pump Dealers’ Association met VAT Commissioner SS Yadav on Friday and demanded to bring down VAT rate at par with Haryana on diesel from 18 per cent to 16.6 per cent as sale has been dropped from 14 crore litre per day to 10 crore liter per day.
The Association said their business has been shifted to Haryana as they have lower VAT on diesel as compared to Delhi. Currently, VAT on diesel is 16.6 per cent in Haryana while it is 18 per cent in Delhi. If the Government decides, diesel rate would come down by 60 paisa per litre, said sources, adding that suppose a liter of diesel which cost Rs44.71 would come at Rs44.18.
Diesel alone contributes around Rs150 crore per month to Delhi’s revenue collection.
Sources said the Delhi Petrol Pump Dealers’ Association has been demanding uniform prices of diesel in Delhi and Haryana. They have threatened to go on strike in May if the Government does not bring down VAT rate as per Haryana.
However, the odd-even scheme has adversely affected VAT collections from the sale of fuels. The data from the first round of the scheme in January shows that collection has dropped by Rs 40 crore.
According to Petrol Pump Dealers’ Association, the sale of diesel has been dropped by 25 to 30 per cent in the Capital. Due to it, the VAT department is incurring a loss of Rs 30 crore per month.
The city Government had raised VAT on petrol to 27 per cent from 25 per cent and on diesel to 18 per cent from 16.6 per cent in February this year.