Free Press Journal

Rising prices of petrol-diesel – State govt forgets to withdraw tax load

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In Nov 2015 it imposed extra tax on petrol-diesel due to sharp price drop

Indore : A government, which levied extra tax on petrol and diesel, to avoid revenue loss in view of a sharp drop in price of the two commodities, has completely forgotten and is conveniently ignoring the demand to withdraw the extra tax levied in November 2015.

The government had levied extra tax in November 2015 with the promise that it (the extra tax) would be withdrawn in case there is a price rise in both commodities.


In November 2015, prices of petrol had dropped sharply from Rs 78 per litre to Rs 61 per litre and diesel from Rs 65 per litre to Rs 59 per litre. The state government then announced that it was incurring heavy loss on per litre sale of both petrol and diesel, which in turn was causing a heavy loss to the state exchequer.

Experts of petrol-diesel trade informed that the state government had raised VAT on diesel from 23% to 27% and also imposed Rs 1.5 per litre additional VAT on the fuel, which is also being largely used by farmers in tractors and water submersible pumps. Similarly, VAT on petrol was also raised from 27% to 31% and a hefty additional VAT of Rs 4 was imposed on per litre sale.

In November 2015, when VAT was increased and additional VAT on per litre sale was imposed, the state government had promised that in future when the rates would increase, the rise in VAT and imposition of additional VAT would be withdrawn.

Experts, reacting to the current record high price of petrol and diesel, have said that this is the right time for the state government to do what it had promised. On Saturday the price of petrol was Rs 76.98 per litre and of diesel Rs 65.42 per litre.

In November 2015, when price of petrol and diesel dropped sharply from Rs 78 to Rs 61 per litre and Rs 65 to 59.50 per litre, respectively, the state government had hiked VAT on petrol from 27% to 31% and on diesel from 23% to 27%. Also, an additional VAT of Rs 4 per litre on petrol and on Rs 1.5 per litre on diesel was imposed. That time it had been promised that this levy would be withdrawn whenever the prices went up to this level Rajendra Singh Vasu,  President, Indore Petrol Dealers Association

UPA-II  Vs  NDA

Central Excise       

UPA-II                                                NDA

(April 2014)                          (FY 2017-17)

Diesel: Rs 3.65/litre             Rs 17.33/litre

Petrol: Rs 9.48/litre              Rs 21.48/litre

VAT in MP

April2014                  FY 2017-18

Diesel: 23%               27% (Rs 1.5/litre additional VAT)

Petrol: 27%               31% (Rs 4/litre additional VAT)

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