Home > Auto > News > Delhi hikes VAT on petrol, diesel amid coronavirus crisis

Petrol price in the national capital was hiked by 1.67 a litre on Tuesday and diesel by a steep 7.10 per litre after the Delhi government raised local sales tax or value-added tax (VAT) on the two fuels.

Petrol in Delhi now costs 71.26 a litre as against 69.59 previously, oil industry sources said.

This follows Delhi government’s decision to raise VAT on petrol to 30 per cent from 27 per cent, previously. In case of diesel, VAT has been almost doubled to 30 per cent from 16.75 per cent.

To generate revenues in the times of coronavirus crisis, several states have already increased the prices of petrol and diesel by adding Value Added Tax and cess.

Haryana government on Thursday decided to increase bus fare by 15 paise per km and hike the VAT on diesel and petrol prices, drawing the flak of the Congress party for its move to "burden people" during a pandemic.

The fare for ordinary, luxury and super luxury buses has been hiked from 85 paisa per passenger per km to 1 per passenger per km to partially meet the increased cost of operation of buses, an official statement said after a meeting of the state cabinet.

Last month, at least 3 states in India have hiked fuel prices by as much as 6 per litre to generate more funds to tackle the coronavirus crisis. The Nagaland government announced cess of 6 per litre on petrol and 5 per litre on diesel. The decision comes after Assam and Meghalaya announced similar measures.

The Assam government had also decided to prices of petrol and diesel predicting at least 50 per cent revenue loss due to cut in oil prices in the international market.

(Also read: Fuel demands plummet further as petrol sales drop by 61% and diesel by 57%)

The government had issued notification stating that VAT (Value Added Tax) for diesel has been fixed at 23.66 paise in the rupee or 17.45 per litre, whichever is higher, and VAT for petrol and other motor spirits at 32.66 paise in the rupee or 22.63 per lire, whichever is higher.

Meghalaya too had decided to increase surcharge on sales tax last week. The price of petrol in the state was raised from 68 to 72 per litre, and the price of diesel has been raised from 61 to 66 per litre.

Massive slump in global oil prices have created ground for governments to further increase excise duty on petrol and diesel to meet additional expenditure needs arising from the coronavirus outbreak.

(Also read: Fuel glut drives this most profitable Indian refiner’s income down 39%)

Official sources had earlier hinted that the global oil market could easily allow the government to increase excise duty on petrol and diesel by 3-5 per litre without impacting their pump prices. This could provide government with additional revenue between 45,000-75,000 crore during 2020-21 at a time when expenditure is set to rise to revive economic activity in the country impacted by lockdown.

(With inputs from agencies)