Thaindian News

New Delhi, July 16 (IANS) Diesel will cost Rs.2.70 less a litre in the capital from July 20 as the Delhi government Friday slashed the value added tax (VAT) on the fuel from the current 20 percent to 12.5 percent, saying petrol pump owners are facing losses.

“We have decided to decrease the VAT on diesel from 20 percent to 12.5 percent effective July 20. This is likely to bring down the prices of the fuel in the capital,” Chief Minister Sheila Dikshit said, announcing the decision after the Delhi cabinet meeting.

“The decision is likely to bring down the prices of the fuel in the capital,” she said.

Diesel now costs Rs.40.10 a litre in the capital and after the decrease in VAT, it will cost Rs.37.40.

“The new rate will be applicable from July 20,” a statement said.

In March, the government had increased the VAT on diesel from 12.5 percent to 20 percent to mop up revenue for the increased expenditure on infrastructural projects for the Commonwealth Games 2010.

The government said the decision was taken with an aim to provide relief to the common man, which was facing difficulties due increase in the prices of essential items following hike in prices of petroleum products by the Centre.

Finance Minister A.K. Walia, who was opposed to any rollback, was not present in the meeting.

Petrol pump owners have been protesting against the hike in VAT, saying vehicle owners are getting diesel filled from neighbouring states as Delhi had the highest VAT on the fuel.

“It was necessary to reduce the VAT on diesel as petrol pump owners were facing losses,” Dikshit said.

However, her government’s decision to slash the VAT on diesel evoked mixed reactions from petrol pump dealers as some of them are demanding a further cut in the VAT.

“We are not happy with this decision as we have asked the government to bring parity in VAT in Delhi and Haryana. The VAT on diesel in Haryana is 8.8 percent and in Delhi it is still 12.5 percent. We will soon meet the Delhi chief minister and finance minister,” said Nishit Goyal, vice president, Delhi Petrol Dealers Association.

“The move will bring much needed relief to common man, especially at the time when inflation is at its peak. However, our long pending demand of bringing parity in VAT rates between Delhi and Haryana is still unheard. There continues to be a gap of over 4 percent,” he said.

Goyal said the formal protest will, however, continue till demands for parity are not met. He also asked the central government to make petroleum prices uniform throughout the country.

Sunil Kumar, manager of a petrol pump in Paschim Puri, said: “Last few weeks had been awful for us. Our business was suffering tremendously due to the increase in the prices of diesel as compared to other states. But now I think things will improve.”

Tanay Gupta, owner of Gupta service station in Moti Bagh, said: “The decrease in VAT will ultimately benefit the consumers who have been reeling under rising prices of essential commodities.”