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    Published On : Wed, Dec 2nd, 2015

    ‘Drought Tax’ on fuel needs reconsideration – VTA

    Vidarbha Taxpayers Association (VTA) has written to Chief Minister of Maharashtra Devendra Fadnavis and State Finance Minister Sudhir Mungattiwar to reconsider ‘drought tax’ introduced of Rs.2 per liter on petrol & diesel recently, which most likely must be declining revenue instead of adding to exchequer.

    VTA president J. P. Sharma said that each state has different VAT rates on fuel which cause steep difference in prices between states ranging from Rs.2 to Rs.6 per liter. Difference between Maharashtra and Delhi VAT rate is just 1%, however still petrol diesel in Delhi is cheaper by Rs.7.62 & Rs.6.17 per liter respectively. Estimated 50,000 trucks and 25,000 other vehicles enter Maharashtra and due to such price difference they always fill their tanks in other states and enter Maharashtra, which is causing huge losses to petrol pump owners especially those on highways.

    ‘Drought Tax’ on fuel
    Sharma said state government is collecting Rs.1524 per truck, Rs.76.20 from per car and Rs.15.28 per two wheeler in form of cess; likewise cess in various names like SSC Rs.2.62, drought tax Rs.2 and 3% IRDP Rs.1.15 is collected which consolidates to Rs.5.77 per liter, which is too high and is not justified and therefore surely requires review.

    Tejinder Singh Renu secretary of VTA said admittedly scrapping of LBT dropped state government’s revenue by almost Rs.8000 crore annually and some addition to compensate this drop was quite obvious; however with introduction of drought tax, price of diesel suffered considerably by which now as compared to Maharashtra diesel is cheaper by Rs.5.50 per liter in Goa, it is cheaper by Rs 3.52 per liter in Karnataka, Rs.1.89 per liter in Andhra Pradesh, Rs.1.87 per liter in Madhya Pradesh, Rs.2.62 per liter in Gujarat and Rs.3.53 per liter in Chhattisgarh.

    Renu said, due to this vast price difference, diesel sale of petrol pumps on highways dropped by almost 25-30%, due to which I believe there could be a situation that State Government instead of expecting revenue increase might find otherwise because such drop also takes away other existing taxes and cess. It is highly recommended that state government should revenue impact so far and take appropriate decision and reconsider this drought tax on fuel. Moreover petrol diesel is as good as necessity and it’s recommended that tax addition should mainly concentrate on luxury items keeping necessity items untouched so that common man is not directly hit.


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