Friday, August 14th, 2020

Increase In Vat On Diesel In Delhi Is Resulting In Heavy Loss Of Sales At Petrol Pumps Making Them Unviable To Operate

DELHI PETROL DEALERS URGE DELHI GOVERNMENT TO LOWER VAT ON DIESEL IN NATIONAL CAPITAL

INVC NEWS

New Delhi,  

Delhi Petrol Dealers Association (DPDA) an apex body of petrol pump owners having membership of 400 fuel pumps employing more than 50 Thousand workers has urged the Delhi Government to to reduce VAT on petroleum products in the National Capital.

Delhi Government had increased Value Added Tax (VAT) on  petrol to 30 per cent from 27 per cent, previously on May 5, 2020 . In the case of diesel, VAT has been almost doubled to 30 per cent from 16.75 per cent .

This increase in VAT has  resulted in  price difference of more than Rs.8/Ltr. in diesel with neighboring states which is resulting in heavy loss of sales and more than 200 petrol pumps have become unviable.” said Mr Anil Bijlani, President Delhi Petrol Dealers Association (DPDA)

“Despite our several requests and representations, mails and tweets, the Delhi Government has shown no empathy towards the 400 Petrol Dealers and their 50000 employees & family members in these distressed times.” said Mr Bijlani

“Delhi Govt. had increased VAT on Petrol & Diesel to 30% and had also introduced a cess of 70% on liquor, it was said that these measures were required to increase the revenue of the state. Liquor cess was withdrawn on 10th June citing loss in revenue and smuggling from neighboring states, however the hike in VAT rate remained unchanged.” said Mr Nischal Singhania, past president of the association.

 “The same logic applies to Diesel also, as hiking the VAT rates have led to a rate difference of more than Rs. 8/Litre from neighboring states resulting in sales shifting to neighboring states and smuggling from these states. VAT on petroleum products contribute a big percentage to the total revenue of the state. By sales shifting to neighboring states due to this massive rate difference, Delhi govt. is losing revenue and it is killing the goose which lays golden eggs.” Added Mr Singhania.

“The unviable petrol dealers will have to resort cost cutting for survival. Some of the steps that we will be forced to decrease manpower, reduce the working hours by operating the petrol pump only during the day since night operations are very expensive and are not required as no diesel sales are left and maybe introduce one weekly off” said Tanay Gupta, General Secretary, DPDA

PROPOSED VAT

“Diesel price is more than Petrol price only in Delhi as the rate of VAT on both products is 30%. Everywhere else in the country including neighboring states of Delhi the difference between the two products is still Rs.6 to Rs.9 per litre”. “Neighboring states of Haryana and Uttar Pradesh also have another advantage of fixed VAT rate in Rs./Litre. DPDA has proposed fixed VAT rates lower than neighboring states to the Delhi govt. which will bring down the price by more than Rs. 9/Ltr. in Diesel & Rs. 3/Ltr. in Petrol :

 

Petrol

Diesel

 

 

 

Present VAT in

Rs. 18.74/Ltr. or 26.80%

Rs. 10.40/Ltr. or 17.48%

Uttar Pradesh

which ever is higher

which ever is higher

 

 

 

Present VAT in

Rs. 15.20/Ltr. or 25%

Rs. 9.20/Ltr. or 16.4%

Haryana

which ever is higher

which ever is higher

 

 

 

Proposed Fixed VAT

 

 

for Delhi in line

Rs. 15/Ltr. or 25%

(Rs. 8.75/Ltr.+25 paisa)

with Haryana & UP

which ever is higher

or (15% + 25 paisa) whichever is higher

 

This massive hike has not only increased the burden on the citizens but has lead to increase in inflation due to transporters increasing their freight charges. The Delhi Govt. should consider that although they had increased VAT with an intention of increasing state revenue, it is proving to be otherwise. The migration of Diesel sales to neighboring state and smuggling of Diesel into Delhi has led to massive drop in sales and thus revenue. In June 2020, the sales drop of Diesel in Delhi was (-) 64% in comparison of the national average drop of only (-)18%. This will result in loss of revenue of more than Rs. 380 crores per annum due to higher VAT.

 

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