High auto fuel taxes bring sales down by 30% in Rajasthan, Auto News, ET Auto

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The hike in diesel prices increases rates of every other commodity as the transportation cost goes up.
The hike in diesel prices increases rates of every other commodity as the transportation cost goes up.

JAIPUR: The hike in fuel prices has put an extra burden on household budgets in the state which has the highest tax levies on auto fuel in the country. The state government levies the highest VAT in the country on both petrol and diesel. Vehicles entering or travelling through the state avoid buying fuel because of the high rates causing tax loss to the government.

Sunit Bagai, president of Petroleum Dealers’ Association, said, “The state is losing 30% of auto fuel sales because of high taxes compared to neighbouring states. Passenger vehicles and goods carriers fill up in other states before entering Rajasthan as the rates are cheaper. On the other hand, the state is taxing the common man to compensate for the loss.”

The state is losing 30% of auto fuel sales because of high taxes compared to neighbouring states. Passenger vehicles and goods carriers fill up in other states before entering Rajasthan as the rates are cheaper..Sunit Bagai, President, Petroleum Dealers’ Association

The state government brought down the VAT on petrol and diesel in February this year by 2%. After the reduction, the chief minister and other political leaders in the state put the blame on Centre for the high fuel rates.

In fact, even after reducing VAT rates on petrol and diesel to 36% and 26%, respectively, the existing tax is still higher than any other state in the country.

Besides VAT, the road cess also needs to be reduced, Bagai said. The hike in diesel prices increases rates of every other commodity as the transportation cost goes up.

On its part, the Centre has resisted pressure so far to bring down central taxes on fuels. Instead of reducing taxes, it is trying to bring fuels under GST.

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Major automobile players such as Maruti Suzuki, Hyundai Motor, Tata Motors and Mahindra reported an adverse impact on production that led to lesser dispatches.

The OMCs had preferred to maintain wait and watch policy on global oil situation before making any revision in prices. This is the reason why petrol prices were not revised for the last three weeks. But extreme volatility in global oil price movement has now pushed OMCs to effect the increase.

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