Representative Image | Photo: PTI
Chandigarh: The Congress-led government in Punjab on Sunday announced a reduction in value added tax (VAT) on petrol and diesel, making them cheaper by Rs 10 and Rs 5 per litre respectively in the state.
The new rates will be effective from midnight. Currently, petrol and diesel rates in Punjab are Rs 106.20 and Rs 89.83 per litre respectively.
The move, which will cost the state nearly Rs 6,000 crore, comes days after the BJP-led central government reduced excise duty on petrol and diesel, and several other states, including Haryana and Himachal Pradesh, slashed VAT rates on the fuels to give relief to consumers.
The decision to reduce VAT on fuel was taken in a Cabinet meeting chaired by Punjab Chief Minister Charanjit Singh Channi.
Addressing the media here, Channi said the Cabinet has taken a major decision of reducing rates of fuel in order to provide relief to the people of Punjab.
"We are reducing the rate of petrol by Rs 10 per litre and diesel by Rs 5 per litre from midnight," he said.
Channi claimed that such a big rate cut was unheard of in the last 70 years.
The chief minister said the new rate of petrol will be Rs 95 per litre and that of diesel would be Rs 83.75 per litre.
According to a list provided by the state government, petrol costs Rs 104.01 in Delhi, Rs 95.29 in Haryana, Rs 95.76 in Himachal Pradesh, Rs 96.13 in Jammu and Kashmir, Rs 116.27 in Rajasthan and Rs 94.21 in Chandigarh.
Similarly, diesel costs Rs 86.71 in Delhi, Rs 86.53 in Haryana, Rs 80.34 in Himachal Pradesh, Rs 80.31 in Jammu and Kashmir, Rs 100.46 in Rajasthan and Rs 80.89 in Chandigarh, it showed.
"People of Punjab may consider it a Diwali gift. We will be giving them more such gifts (major public welfare announcements) in the future.
"People have been burdened so much in the past years, but we are taking steps to provide relief to the people in every sector," Channi said, pointing at decisions like reduction in electricity rates taken by his government.
Assembly polls in Punjab are due early next year.
Channi further claimed that after the reduction, the rate of petrol in Punjab will be the lowest among the northern states for the first time in 20 years.
"We are close to UT Chandigarh in rates, but our rates are cheaper by big margins as compared to other states," he said.
After 20 years, diesel in Punjab will be cheaper than in Haryana, Channi said, claiming that petrol in Punjab is cheaper than Delhi.
Channi also hit out at the BJP-led government at the Centre, alleging that ever since it came to power, the rates of petrol and diesel have been shooting up.
He further alleged that the government at the Centre has “looted” the people of the country.
In the last 18 months, diesel has jumped from Rs 61 per litre to 98.50 a litre, the chief minister said.
Initially, the Centre raised fuel prices by Rs 30 a litre and now has reduced it by Rs 5 and Rs 10 a litre to gain words of appreciation, he claimed.
Further, taking a dig at the BJP-led government at the Centre, Channi said it is really unfortunate on the part of its leadership to slash the prices of petrol and diesel by Rs 5 and Rs 10 per litre respectively from November 4, thereby cutting down the excise duty, which adversely impacts the income of all states, including Punjab which has 42 per cent share in the excise duty collected by the Centre.
Channi also took a dig at the Akalis for their protest against the state government over fuel prices.
Finance Minister Manpreet Singh Badal said after the reduction in tax, the effective VAT on diesel and petrol will be 9.92 per cent and 13.77 per cent respectively.
Later, an official statement, however, said that the rate of VAT on petrol has been reduced from 27.27 per cent (24.79 per cent plus 10 per cent surcharge) to 15.15 per cent (13.77 per cent plus 10 per cent surcharge) and that on diesel from 17.57 per cent (15.93 per cent plus 10 per cent surcharge) to 10.91 per cent (9.92 per cent plus 10 per cent surcharge).
Badal said the decision of lowering VAT would cost Rs 6,000 crore of revenue loss annually to the state.
He also demanded that the Centre should reduce taxes other than excise duty on fuel, referring to additional excise duty, special excise duty, surcharge, cess etc.
Badal claimed that during the past six years, the Modi government has taken away Rs 6 lakh crore of the states' share.
He further pointed out that lowering of excise duty on fuel by the Centre will result in a revenue loss of Rs 900 crore to the state.
The government of India should not put the burden of its “financial or economic mismanagement” on the states, the minister added.
Badal said states have the responsibility of carrying out several welfare measures for people.
"Education, health, police arrangements, jail arrangements, canals, old age allowance, power, water, and all welfare measures are the responsibility of states. When they usurp states' share, they are not taking it from states but from the people of India," he said.
Badal said fuel prices in the country were low despite high crude prices in the international market during the Manmohan Singh-led government at the Centre.