Indore: High VAT on petrol, diesel in state hits people, govt hard

Indore: At a time when petrol and diesel are prices are touching Rs 80 and Rs 65 per liter respectively, high rate of VAT on fuels is burning pockets of vehicle-users and the government. Though, the tax (VAT) collected from fuel has been increasing constantly for the last three years, still the tax collected by the state government from petro-products is way behind other small states. Experts said that only Rs 8,802 crore was collected as tax in 2016-17 while it should be over Rs 12,000 crore.

In Madhya Pradesh, VAT on petrol is 31% and additional VAT of Rs 4 per liter while on diesel it’s 27% and Rs 1.50 per liter additional VAT. The official figure of Commercial Tax Department reveals that there is more consumption of diesel in the state and the tax collection from the fuel is obviously more than the petrol.

In 2016-17, VAT collected from diesel stood at Rs 5,886 crore while from petrol it was at Rs 3,199 crore. Rs 71 crore was also collected from ATF. Thus the total tax collection from fuel stood at Rs 8,802 crore in the year. If we take the figure of a smaller state like Gujarat, the figure stands at Rs 15,958 crore in that year.

This also puts a question mark on tax collection of the state, which is located at the centre of the country and vehicles use to pass through it regularly. There is no other alternate route for them to bypass MP. But due to high VAT, the truckers take fuel from our neighboring states, where fuel price is cheaper by Rs 2 to Rs 6 per litre. So, they prefer to take fuel from there.

Trucks fit 1000L fuel tanks

Official sources said as per the Motor Vehicle Act, a heavy vehicle can have a fuel tank of 200 liter capacity only. But to avoid purchase of fuel in MP, they have fitted tanks of the capacity up to 800 to 1000 liters. So when a truck starts journey from UP or beyond, gets fuel from UP where diesel is cheaper than MP by Rs 6 per liter, and complete its to-and-fro journey in 800 liter fuel. Industry experts say the state government would collect more tax only if it reduces VAT rate on fuels.

Higher VAT on diesel and petrol is badly affecting sale of fuels, which ultimately affects govt’s tax collection. High rate also hits people and state govt hard.
– Sanjay Dubey, Secretary, Indore Petrol Dealers Association

Indore: High VAT on petrol, diesel in state hits people, govt hard
Indore: High VAT on petrol, diesel in state hits people, govt hard

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