HYDERABAD: As the Telangana government is not inclined to slash value-added tax (VAT) on petrol and diesel, petroleum dealers claim that the State would lose out on diesel sales in massive numbers, as trucks making long-distance travels would prefer to buy it in Karnataka over Telangana, as fuel has become much cheaper in the neighbouring State following a cut of Rs 7 per lite in the prices of both petrol and diesel.
According to A Rajiv, joint secretary, Consortium of Indian Petroleum Dealers (CIPD), if the State government chooses not to reduce VAT citing loss of revenue by Rs 1,200 crore for reducing VAT by Rs 1, the State would incur losses of 20 times that amount by not being competitive, as sales would come down locally.
Rajiv felt that there was an urgent need for the commercial tax commissioner in the State to advise the State government on consequences of not making the right decision. TRS spokesperson M Krishank, however, argues that reducing excise duty would automatically reduce State VAT, which is levied on the sum of base price, central excise duty, transportation charges and dealer commission.
For petrol, Telangana charges 35.2 per cent as VAT and for diesel it is 27 per cent. After the Centre reduced excise duty, VAT on petrol has automatically come down by Rs 1.30 and on diesel by Rs 2.78 per litre.
BJP State general secretary G Premender Reddy maintains that during the pandemic, when the price of crude oil was low and consumption was also low, the Centre had kept the excise duty high to rationalise the situation. He said due to economic recovery, the Centre had decided to reduce excise duty.