Updated on: Wednesday, November 10, 2021, 06:19 PM IST

Rajasthan losing business of fuel to other states due to high VAT rates


Jaipur: The issue of VAT reduction on petroleum products in Rajasthan is getting serious as the price difference in the state with neighbouring states on petrol and diesel has reached up to Rs 20.88 and 16.28 per litre respectively. The pumps of border districts are losing business to neighbouring states and if industry experts are to be believed the state is losing more revenue by maintaining the current rate of VAT than by reducing it.

The Rajasthan CM Ashok Gehlot is fearing a revenue loss by reducing the VAT on petrol and diesel. He said ‘ more than 22% of the total revenue of the Rajasthan State comes from the VAT on petrol-diesel. From January 29, 2021, till now the Rajasthan Government has reduced around Rs. 3 per litre on petrol and Rs. 3.80 per litre on diesel. The State is incurring the revenue loss to the tune of Rs 2,800 crore per annum.’ Though he hints that as all other states have reduced prices we would also have to reduce it.

On the contrary, the industry experts are saying that the demand for auto fuels has fallen by 20-25 per cent in the state as the vehicles passing or entering Rajasthan skip refilling here. According to the Rajasthan Petroleum Dealers Association, Punjab has over 3300 fuel stations and Harayan a similar number compared to Rajasthan’s 5667, but Punjab sold 55 and Haryana sold 45 lakh kiloliters of fuel last year compared to Rajasthan’s 39 lakh kiloliters. Many pumps have shut their business in border districts in the last few days.

Rajasthan is charging 36 per cent of VAT on petrol and 26 per cent on diesel which is the highest in the neighbouring states like Punjab, Harayana, UP, MP and Gujrat. The price difference with Punjab is highest with around Rs 21 on petrol and Rs 16 on diesel. While with Gujrat, UP and Haryana, it is in the range of Rs 15 to 18. The price difference with MP is lowest with around Rs 3.71 per litre on petrol and Rs 4.67 on diesel.

Sumit Bagai, the president of Rajasthan Petroleum Dealers Association said ‘we are not only losing business to other states but aur people are suffering.’

While Rajpal Singh Shekhawat, one of the ministers in the former Bjp government said ‘The government could earn more revenue by reducing rates from the resultant increase in the state of auto fuels.’ He said that low tax rates always increase revenue as it attracts investment that generates employment and people prefers to pay tax than to evade it, so CM should look at a bigger picture than simple mathematics.

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Published on: Wednesday, November 10, 2021, 06:20 PM IST