In bid to curb smuggling from Haryana, Punjab government to reduce VAT on petrol

The Punjab  government is all set to reduce Value Added Tax (VAT) on petrol and petroleum products in the state to bring them at par with Haryana and Chandigarh.

Published: 29th May 2017 09:13 PM  |   Last Updated: 29th May 2017 09:13 PM   |  A+A-

Petrol pumps ( File photo | Reuters)

Express News Service

CHANDIGARH: In order to stop smuggling of petrol from neighbouring Haryana, which has brought a revenue loss of Rs 250 crore annually, the Punjab  government is all set to reduce Value Added Tax (VAT) on petrol and petroleum products in the state to bring them at par with Haryana and Chandigarh.

Sources said that the VAT on petrol in the state is 37.5 per cent and the government has decided in principle to reduce it to 26.25 per cent, the directions for which were given in a meeting with officials of the excise and taxation department by Punjab chief minister Capt Amarinder Singh.

They were told to make the draft proposal, which will be part of the state budget; the first budget of the new government, and be presented in the state assembly in June.

The government feels that due to high prices of petrol in around 500 petrol pumps which are in bordering districts of the state, petrol smuggling  from Haryana takes place as it is cheaper by approximately Rs 6 per litre.

Furthermore, the people living in these areas bordering Haryana and Chandigarh prefer to fill their fuel from there instead of Punjab, thus resulting in revenue loss of Rs 250 crore per year.

“To stop revenue loss and increase petrol sale in the state particularly in the border districts, the proposal to reduce VAT on petrol will come in the budget session,’’ said an official.

During the tenure of the SAD-BJP government, there were meetings to reduce VAT on petrol for all northern states, but it is yet to be carried out. Only diesel prices are almost similar.

Sources in the excise department point out that pumps in Punjab’s Bathinda, Fazilka and Mansa are getting petrol from Dabwali and Sirsa in Haryana at about Rs 6 per liter, less, and most of these pumps belong to political leaders or their close aides, keeping them out of official reach.

The smugglers modus operandi also goes to Rajasthan. An oil tanker is filled at the Bathinda refinery to supply diesel at a pump in Bathinda, Mansa or Fazilka but  but goes straight to Hanumangarh or Ganganagar in Rajasthan instead as diesel there is priced higher than Punjab.

Each tanker carries 12,000 liters, thus earning the pump owner Rs 72,000 per tanker per trip by smuggling fuel to Rajasthan.

On its way back, it stops at Dabwali or Sisra in Haryana and fills petrol to bring back to Punjab, thus pocketing another Rs 72,000. Hence, the pump owner earns Rs 1.24 lakh with each trip, said sources.

Sources added that other smuggling routes are Chandigarh to Amritsar, Ambala in Haryana to Rajpura in Punjab, Hisar in Haryana to Patiala and Patra in Punjab and Baddi in Himachal Pradesh to Ropar in Punjab.

Talking to the New Indian Express, Ashwinder Singh; President of Punjab Petroleum Dealers Association says, “We strongly feel that the Punjab government will gain a revenue of Rs 400 crore per annum by equalising VAT rates and also increase sales and stop illegal activities like smuggling of petrol.’’

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