PUNJAB HOPES FOR RS 490 CR FROM DIESEL CESS MAY GO UP IN FLAMES

CHANDIGARH: Punjab government’s move to impose extra cess on diesel to mop up additional Rs 490 crore could be in keeping with its “myopic” approach of losing out on long-term revenue growth vis-a-vis its neighbour Haryana.

In sharp contrast to 5.58% increase in annual sales of petroleum products in Punjab from 2008-09 to 2014-15, the figure has shot up by 68% in Haryana for the corresponding period.

Punjab loses out to Haryana in terms of transit sales as truckers prefer to get fuel there. There are around 600 petrol pumps in the bordering districts of Mohali, Fatehgarh Sahib, Patiala, Ropar, Hoshiarpur and Pathankot on the national or state highways. There is consumption of over 25 lakh litres of petrol and 94 lakh litres of speed diesel per day, which varies during harvesting season.

“Imposition of the Re 1 cess on diesel will lead to further reduction in value added tax (VAT) collection and other states, including Haryana and Chandigarh, will gain at the expense of Punjab. Punjab government hopes to generate additional revenue of Rs 500 crore per year, whereas with 30% drop in sales of diesel alone, they shall tend to lose additional 400 crores of revenue per year,” said J P Khanna, president of the Punjab Petrol Pump Dealers’ Association.

Diesel in Punjab will now be costlier by Rs 1.70 per litre as compared to Chandigarh and Rs 1.42 per litre costlier than Haryana. Earlier, there was difference of only around 50 paisa between diesel price of Punjab and Haryana.

On May 20, Punjab government has decided to hike infrastructure development fee as part of its plan to develop rural and urban infrastructure. The fee has been enhanced from the existing Re 1 to Rs 2 per litre on petrol, besides imposition of Re 1 per litre on sale of diesel within the state.

“Chandigarh has made the smart move to reduce VAT, which will result in loss of business in cities close to the UT. All these factors should have been looked into before taking the decision,” said Sandeep Sahgal, a petrol pump owner in Jagraon.