NEW DELHI: Delhi recorded a 79 per cent loss in diesel and 59 per cent loss in petrol sale in May, due to the increased Value Added Tax (VAT) on the fuels, said Delhi Petrol Dealers Association (DPDA). According to DPDA, the decision to increase VAT, although taken with a good intention to increase revenue, is proving to be counterproductive as the city is losing both sales and revenue.
The state VAT rates on petrol and diesel were increased to the highest slab of 30 per cent on May 5. Consequently, a massive rate difference of around Rs 7 per litre has occurred between Delhi and its neighbouring states. As per data, on Thursday, the diesel price per litre in national capital is Rs 69.39. While it is Rs 62.68 (-6.71) , Uttar Pradesh Rs 63.45 (-5.94), Punjab Rs 63.30 (-6.09) and Uttrakhand Rs 63.71 (-5.68).
“The primary reason for minimal recovery in diesel sales is the massive rate difference of around Rs 7/litre with neighboring states resulting in Delhi losing its sales and revenue to the adjoining states. Delhi has shown a much lower growth in May as compared to the national average sale growth. Diesel sales in Delhi are down (-79%) of normal sales compared to the national average (-31%) in the month of May.
The calculations show a loss of revenue to the tune of Rs 58 crores per month due to higher taxes.” said Nischal Singhania, expresident, DPDA. The statement also read, “The vehicles bringing in essential commodities to Delhi were fuelling from Delhi till May 5, 2020, however with such a rate difference these vehicles are now fuelling from neighbouring states. Smuggling of diesel has started in Delhi from Haryana and UP and is going to increase with passage of time.” Lately, diesel sales had dropped in April by 84 per cent compared to historical sales.
The association has also written a letter to Chief Minister Arvind Kejriwal demanding roll back or reduce VAT charges on fuels. “Revenue will increase if at least Delhi government reduces VAT rates by Rs 2/litre as compared to neighbouring states. The reduction in rates would also give relief to citizens of Delhi who are inching towards normal economic activities with easing down of restrictions from June,”said DPDA.