Punjab and Haryana raised Value Added Tax (VAT) on diesel, negating the full benefit of Rs 2 per litre cut on fuel to consumers.
The step has triggered sharp criticism from the farming sector of both states. While SAD-BJP led government hiked VAT on diesel to 13.4 per cent, the neighbouring BJP government in Haryana jacked up the tax to 16.4 per cent.
After adding local levies like cess and surcharge, the effective rate of tax on diesel in the two states will be 17.29 per cent and 17.22 per cent respectively.
The VAT on diesel has been hiked from 11.5 per cent (with surcharge 12.07 pc) to 16.4 per cent, a senior official of Haryana Excise and Taxation Department said on Thursday. “VAT on diesel in Punjab has been raised from 11.25 per cent to 13.4 per cent. If we include cess (Rs 1 per litre) and surcharge (10 per cent on VAT), the effective tax becomes 17.29 per cent,” a senior official of Punjab Excise and Taxation department said.
After factoring in hike in tax and Rs 2 per litre cut in fuel by oil marketing companies, retail rate of diesel in Punjab dropped by Rs 1.25 per litre while in Haryana the price remains almost the same, dealers said.