Delhi petrol delaers demand reversal of recent VAT hike on Diesel and petrol Newsdesk

Delhi Petrol pump dealers have lost 79% of Diesel sales in the month of May’20 on a year on year comparison, Despite the lockdown being eased  , this happened after the state increased Value Added Tax (VAT) on both diesel and petrol to a historic high.

According to the Delhi Petrol Dealers Association (DPDA) The decision to increase VAT, although taken with a good intention to increase revenue is proving to be counterproductive as Delhi is losing both sales and  revenue.

Sh. Anil Bijlani, President DPDA said “we acknowledge the effort of the Delhi Govt. for the measures taken by the Delhi govt. in the fight against the pandemic situation arisen due to corona virus. The government has also taken various measures to implement the unlock to tackle the economic impact caused by the lockdown”.

VAT on Petrol & Diesel was increased to the highest slab of 30% on 5th of May. The sales drop in the month of April was around (-)84% in Diesel compared to historical sales. Even with partial unlocking of the state in May, the sales drop in Diesel is still at  (-) 79%. Whereas the neighboring states of Haryana & Uttarpradesh have recovered most of their Diesel sales.

“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. The vehicles bringing in essential commodities to Delhi were fueling from Delhi till 05th May 2020, however with such a rate difference these vehicles are now fueling from neighboring states. Delhi has shown a much lower growth in May’20 in comparison 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, past president,DPDA.

Delhi Petrol Dealers Association has written again to the Delhi Chief Minister Sh. Arvind Kejriwal and Deputy CM Sh. Manish Sisodia requesting the Delhi govt. to reduce VAT on petroleum products.

Delhi govt. is putting up massive effort for reopening the lives of citizens of Delhi along with the economy. Delhi as a state can garner maximum VAT revenue by increasing sales if the Delhi govt. reverts the hike and reduces the VAT rates and keep it lower than the neighboring states by at least Rs.2/Litre. The reduction in rates would also give relief to the citizens of Delhi who will be inching towards normal economic activities with easing down of restrictions from June 2020. Diesel being an essential commodity also has an inflationary effect on prices of various commodities and services, which directly affect the common man.

We are giving below the comparison of RSP of Diesel with neighboring states of northern India which directly affect the sales of Delhi :

As on 04th June 2020DieselDifference

With this kind of price disparity with the neighboring states petrol pumps in Delhi have started losing sales to these states and would lead petrol pumps to complete shutdown. Smuggling of diesel has started in Delhi from Haryana & Uttarpradesh and is going to increase with passage of time. A small city like Delhi is immediately affected by price disparity with the bigger neighboring states, who in any case have much higher volumes in terms of sales and tax collection thereupon. Delhi is giving away the VAT revenue on petroleum products in a platter to these states by keeping higher VAT rates.

The livelihood of petrol pump dealers and its staff depends on the sales, if that is finished it would lead to massive job losses and unemployment.

Delhi Petrol Dealers Association ® request the Hon’able Chief Minister of Delhi to kindly consider reducing VAT on petroleum products and give relief to the petrol dealers and the public at large.

Source: Varinder Arora