Punjab reduces VAT on fuel, petrol prices to come down by Rs 10/litre, diesel Rs 5/litre

Talking to the media persons here at Punjab Bhawan after a Cabinet meeting, Punjab Chief Minister, Charanjit Singh Channi, said that with this decision now Punjab has the lowest fuel rates in the region (except UT Chandigarh) and the rates of diesel in Punjab was much lower than Haryana and Rajasthan. With Sunday’s decision, the rate of VAT on petrol has been reduced from 27.27% (24.79%+10% surcharge) to 15.15% (13.77%+10% surcharge) and that on diesel from 17.57% (15.93%+10% surcharge) to 10.91% (9.92%+10% surcharge).

In order to bring parity in the rates of VAT on petrol and diesel with neighbouring states/UTs and to give a boost to the farmers of Punjab during the upcoming Rabi season and relief to consumers in general, CM Channi said that the government was taking this significant decision of reducing VAT on petrol and diesel from the midnight of November 7 and November 8.

Taking a dig at the BJP-led Central government, CM Channi said that it was really unfortunate on the part of the Centre to have slashed the prices of petrol and diesel by Rs 5 and Rs 10 per litre respectively from November 4, 2021, thereby cutting down the excise duty, which adversely impacts the income of all states. Punjab has a 42% share in the excise duty collected by the Centre.

Channi said that the reduction in VAT rates on petrol and diesel now will result in increased fuel consumption, decrease in inflation for the poor and middle classes and boost the overall economic cycle.

As per records, the annual consumption of petrol and diesel as per 2019-20 figures was 1352260 KLs and 3886897 KLs respectively. The reduction in VAT on petrol and diesel by Rs 10 and Rs 5 respectively, will result in an annual loss of Rs 1352 crore for petrol and Rs 1943 crore for diesel respectively.
This will be in addition to the estimated annual loss of Rs 684.68 crore and Rs 172.11 crore of VAT revenue for petrol and diesel respectively, owing to the reduction of excise duty by the Government of India.

The Chief Minister said that after slashing VAT, the new petrol rates in Punjab from Sunday night will be Rs 95/litre instead of Rs 105/litre. Likewise, the new diesel rate will be Rs 83.75/litre from Sunday midnight, instead of Rs 88.75/litre as compared to Delhi, where the prevailing rate of petrol is Rs 104.01/litre and that of diesel is Rs 86.71/litre.