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VAT still hurts
May, 11th 2010

The petrol dealers across the Capital have threatened to go on strike to protest the increase in the value added tax (VAT) on diesel.

The latest strike call comes a month after the dealers had decided to withdraw an earlier shutdown call following discussions with the government.

The dealers claim the increase in VAT, announced in April, has affected their business as the cost of diesel in the neighbouring states remains lower than in the Capital.

According to the dealers, the difference in rates has resulted in drivers buying diesel from either Uttar Pradesh or Haryana where it is almost Rs 4 cheaper.

The Delhi Petrol Dealers Association (DPDA), a group of 450 dealers, has asked all its members to shut shop on Friday to pressure the government into withdrawing the VAT hike. The association has also warned that the agitation might continue if the government did not take note of their problems.

The government had increased VAT on diesel from 12.5 per cent to 20 per cent. According to sources, the government at present is not considering any withdrawal.

Although there has been a 37 per cent decrease in the sale of diesel in Delhi. Our statistics reveal we have earned more tax. The increase in VAT is only affecting a few petrol pump owners who are located close to the Delhi border, Finance Minister A K Walia said.

To address the issues raised by the dealers, the Delhi government, meanwhile, has planned to hold a meeting with Haryana later this month. The minister has also reportedly written to the Union Minister to consider the matter. The petrol dealers claim the plunge in diesel sale figures indicates that diesel buyers have already shifted from Delhi to Haryana.

Last month, the dealers had decided to call off the shutdown a day before the strike after Chief Minister Sheila Dikshit told them her government will monitor diesel sales for a month and resolve the problem if required.

The DPDA president Atul Peshawaria, however, said even after a month, Dikshit has not given any importance to their demands.

We have statistics that show dealers have been hit hard. We have spoken to the chief minister but she hasnt taken any concrete step till now, Peshawaria said.

In June 2008, Haryana reduced the VAT on diesel to 8.8 per cent from 12 per cent, making it cheaper than Delhi, where VAT on diesel then was 12.5 per cent.

By March this year, the sale of diesel had plunged to 8.5 crore litres a month from earlier 13.5 crore litres a month (loss of 37 %).

In the last one month, sales have dipped to nearly five crore litres, Peshawaria said.

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