Delhi Govt Will Reduce VAT On Petrol, Diesel Soon: Arvind Kejriwal

TPI Staff November 11, 2021

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Mumbai: Petrol and diesel will soon become cheaper in the national capital as Chief Minister Arvind Kejriwal on Wednesday said his government will reduce the value-added tax (VAT) on the fuel. Several states reduced VAT after the Center cut excise duty on fuel by Rs 5 last week.

Speaking at the Times Now Summit 2021, Kejriwal said the reduction in excise duty by the central government is very less. After the reduction in excise duty on petrol by the Centre, total taxes on petrol were reduced by 50% and on diesel by 40%. The central government, along with several states, cut excise duty and local sales tax or VAT respectively, which has led to a reduction in fuel prices in the recent past.

Fuel pump prices are fixed after adding central excise duty, commissions paid to dealers and VAT to the basic oil prices. Basic oil prices include international benchmark crude oil prices and freight rates.

Before the recent cut, central excise duty in Delhi was Rs 32.90 per litre and VAT 30%, which was 54% of the final retail price of diesel-based on the value-creation basis of the fuel available from state-run oil marketing companies. According to a report in PTI, these taxes have come down by 50% after the reduction in central excise duty in Delhi.

At least 24 states and union territories have matched the reduction in VAT with that of the central government. The percentage of taxes in the retail fuel price in those states would be marginally lower.

In Delhi, central excise duty on diesel was Rs 31.80 per litre, VAT 16.75 per cent and air ambient duty at Rs 250 per kilolitre, taking the total tax in the capital to 48%. After deducting excise duty of Rs 10, these taxes have gone up to 40% and above in VAT reducing states.