New Delhi:
In a breather for Delhiites, diesel will cost Rs 2.50 less per litre as Delhi government on Friday rolled back Value Added Tax (VAT) on the fuel from existing 20 per cent to 12.5 per cent.
A litre of diesel will now cost Rs 37.60 against the current price of Rs 40.10. The new rate will come into effect from July 20.
The decision to slash VAT on diesel, which was increased to 20 per cent from 12.5 per in the state budget in March, was taken at a cabinet meeting presided over by Chief Minister Sheila Dikshit.
Surprisingly, Finance Minister A K Walia, who has been opposing any roll back, was not present in the Cabinet meeting today.
Delhiites were shelling out Rs 40.10 per litre on diesel after its prices were increased by Rs 2 by the Centre on June 25.
After the Cabinet meeting, Dikshit said the decision to slash the VAT on the diesel was taken after it was found that the city government was losing on revenue from sell of diesel as people preferred to buy the fuel from neighbouring cities of Haryana where the rate was much less.
The decision will also help contain inflationary trend and bring relief to the common man, the Chief Minister said.
Delhi Petrol Dealers Association (DPDA) have been demanding a cut in VAT on diesel holding that sale of the fuel had come down drastically after the tax was increased in the budget. The VAT on diesel in Haryana is 8.8 per cent.
"The decision has been taken as we were losing on revenue after the increase in VAT in last budget. People preferred to go to Haryana to purchase diesel. That is why we have decided to cut down the VAT on the fuel," Dikshit said.
The Chief Minister also said the Union Government has already hinted that diesel prices will also be deregulated like the petrol prices and the cut in VAT was "necessary".
In the last budget, the Delhi government had hiked VAT on diesel from 12.5 per cent to 20 per cent increasing its price by Rs 2.37 more per litre.
Dikshit said the government has also decided to bring down the VAT on dry fruits from 12.5 per cent to five per cent. VAT was increased to 12.5 per cent from five per cent in the Delhi budget.
Walia, while presenting the budget, had defended the diesel VAT hike by citing examples of other states like Madhya Pradesh and Punjab, saying that they charge a far higher VAT on diesel than Delhi.
Meanwhile, the DPDA said the decision will bring the much desired relief to the common man.
However, it renewed the demanded to bring parity in VAT rates of diesel between Delhi and Haryana.
"There continues to be a gap of over 4 per cent in the cost of diesel between the two states which is affecting our sales," it said.