Residents of Punjab and motorists / industry should be happy. The state has become the latest in India to reduce taxation on petrol and diesel. Effective midnight of November 7-8, the Punjab state government cut retail price of petrol sharply by Rs 10 a litre and by Rs 5 a litre for diesel.
Punjab chief minister Charanjit S Channi tweeted: “Petrol & Diesel prices impact every household, industry & agriculture of the State. Taking a landmark historic decision, the Govt. of Punjab has reduced the Petrol prices by Rs. 10 & Diesel prices by Rs.5 per litre.”
Talking to media persons at Punjab Bhawan after the Cabinet meeting yesterday, Chief Minister Channi said that with this decision now Punjab has the lowest petrol rates in the region (except UT Chandigarh). He said the rates of diesel in Punjab are also much lower than Haryana and Rajasthan.
With this decision, the rate of VAT on petrol has been reduced from 27.27% (24.79%+10% surcharge) to 15.15% (13.77%+10% surcharge) and on diesel from 17.57 % (15.93%+10% surcharge) to 10.91% (9.92%+10% surcharge).
The Chief Minister said after slashing the VAT on petrol and diesel, the new petrol rate in Punjab would be Rs 95 a litre instead of earlier Rs 105 a litre. Likewise, the new diesel rate would be Rs 83.75 a litre instead of Rs.88.75 a litre as compared to Delhi, where the prevailing rate of petrol is Rs 104.01 a litre and diesel Rs.86.71 a litre, respectively.
He added that the fuel price reduction is to “bring parity in the rates of VAT on petrol and diesel with neighbouring states/UTs and to give a boost to the farmers of Punjab during the upcoming Rabi season and relief to consumers in general. The reduction in VAT rates on petrol and diesel will result in increase in the consumption, decrease in inflation for the poor and middle classes and boost the overall economic cycle.” As a result of this reduction, the rate of petrol in Punjab will be lowest (except Chandigarh) in the region.
It may be recollected that on November 4, the Central government had cut excise duty on petrol by Rs 5 a litre and by Rs 10 on diesel. Following that a number of states including Assam, Tripura, Gujarat, Uttar Pradesh, Karnataka, Bihar, Goa, Puducherry and Mizoram reduced VAT on the two fuels,
The states yet to cut VAT on petrol and diesel include Maharashtra, Tamil Nadu, Rajasthan, West Bengal, Odisha, Andhra Pradesh, Telangana and Delhi.
The final retail price of the two fuels is arrived at after factoring Central excise duty, dealer commission and Value Added Tax on the basic oil price, which is the average of the fortnightly global crude price along with freight charges.
Diesel turned costlier by Rs 8.78 a litre, petrol by Rs 7.55 in October