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Earn Rs 200 crore more on fuel tax after hike
June, 30th 2010

The recent hike in fuel prices might be burning a hole in the common man's pocket, but Punjab and Haryana expect to increase their revenue collections by close to Rs 200 crore per annum on account of the increase in rates for diesel, petrol, kerosene and LPG.

The state governments follow an ad valorem tax structure on fuel prices, which means that whenever there is an increase in the rates of fuel, the tax collection also moves up proportionately.

"Our revenue will grow by Rs 80 to 100 crore due to the increase in petroleum product prices," Punjab Excise and Taxation Commissioner A Venu Prasad said Tuesday.

Similarly, Haryana is also expecting a Rs 100 crore jump in revenue. "Revenue from petroleum products is expected to increase by Rs 100-105 crore on an annual basis because of the hike in petroleum rates," Haryana Excise and Taxation Commissioner Anurag Rastogi said.

Punjab and Haryana earn annual revenue of Rs 1,500 crore and Rs 2,100 crore, respectively, from petrol, diesel, cooking gas and other fuel sales.

Punjab imposes 27.5 per cent VAT, plus a 10 per cent surcharge, on petrol. It also levies Rs 1 for every litre of the fuel as infrastructure cess and 1 per cent octroi. The VAT rate on diesel stands at 8.8 per cent, on top of which a 10 per cent surcharge and 2 per cent octroi is imposed.

In contrast, Haryana levies 20 per cent VAT plus a 5 per cent surcharge on petrol and 8.8 per cent VAT plus a 5 per cent surcharge on diesel.

The high rate of VAT in Punjab has resulted in petrol prices going up by Rs 4-6 per litre in comparison to its neighbours like Haryana and Himachal Pradesh (24 per cent VAT).

Petroleum dealers in Punjab claim they are losing business to neighbouring states because of the sharp difference in petrol prices. "The petrol pumps which are located in Mohali, Ropar, Fatehgarh Sahib, Rajpura, Zirakpur have been hit hard and majority of them have been forced to shut down their operations," Punjab Petroleum Dealers Association President J P Khanna said.

Meanwhile, the Punjab Petroleum Dealers Association has threatened to hold a one-day strike on July 13, demanding abolition of octroi and a reduction in the VAT rate on petrol in order to sustain their businesses.

"We will close our petrol pumps for one day on July 13 if the state government did not agree to our demands," the association's president, J P Khanna, said Tuesday. Punjab has a total of 2,736 fuel outlets, he said.

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