Deora Compliments Delhi Government for Reducing Sales Tax on Diesel

Petroleum Minister Calls upon other States to Follow the Example Set by Sheila Dixit Government

The Minister of Petroleum & Natural Gas, Murli Deora has reiterated his earlier appeal to State Governments to reduce and rationalize the Sales Tax/VAT on sensitive petroleum products – PDS kerosene, diesel and petrol to provide relief to the consumers. In this regard, he had spoken to Chief Minister Delhi also. In a statement on 16 July, he complimented Shiela Dixit’s Government for responding positively by reducing the Sales Tax on Diesel from 20% to 12.5%. This, Mr. Deora said, would provide relief to the consumers from the additional sales tax levied as a result of recent price hike due to the advalorem nature of the State taxes and in fact bring down Diesel prices to a level lower than the prices prevailing before the increase effected on 25th June, 2010. He expressed hope that other States would also follow Delhi’s example to provide relief to consumers.

Mr. Deora also pointed out that the Central Excise Duty on Petrol & Diesel has been converted into fixed rates while the excise and customs duty on PDS Kerosene and Domestic LPG has been reduced to nil being common man’s fuel. He referred to the high rates of sales tax levied in many of the States on Petrol & Diesel, which has further compounded the increase in basic prices in the States. He cited an example of Bihar which levies 12.5% tax on PDS kerosene, whereas even after recent increase Central Government/OMCs would incur under-recovery of more than Rs.16,000 crore on kerosene. It is, therefore, in the interest of the consumers of the respective States that they reduce the sales tax collected on Petrol, Diesel and kerosene

[Source: PIB Press Release dated 16 July 2010]