VAT on petrol, diesel in U.P. one of the lowest in India

The state’s tax income from petroleum products is the highest after Maharashtra

LUCKNOW : The rates of the Value Added Tax (VAT) on petrol and diesel in Uttar Pradesh are one of the lowest in the country, but the revenue that the state earns annually from petroleum products is the highest after Maharashtra, the data available on the website of ministry of petroleum and natural gas indicates.

Unlike most other states, Uttar Pradesh also does not levy any additional tax or cess on diesel and petrol. The state charges at a flat rate. According to the UP government’s notification issued on November 2021 as well as the ministry’s data, the rate of tax on petrol in the state is 19.36% or Rs 14.85 per litre, whichever is greater. In case of diesel, the tax rate has been fixed at 17.08% or Rs 10.41 per litre, whichever is more.

Despite not having increased the fuel tax in its five-year tenure, the Yogi Adityanath government lowered the VAT on petrol and diesel in November last year, making them cheaper by Rs 12 per litre in the state.

Uttar Pradesh took the step after the Central government slashed the excise duty on the two petro products, urging states to follow suit by lowering VAT on both the products to give some relief to consumers.

Targeting the Oppositionruled states, Prime Minister Narendra Modi, while holding a Covid meeting with chief ministers on Wednesday, regretted that some states had not yet reduced VAT on petrol and diesel. He appealed to them to do so in the national interest.

Earlier, Union minister Hardeep Singh Puri informed the Rajya Sabha that nine states, including Maharashtra and Kerala, had not reduced VAT on petrol and diesel.

Though more than 20 states have lowered VAT since, tax on petrol and diesel in most of these states, apart from the ones that have not cut VAT, remains much higher than what is being levied in UP.

As per the ministry’s data, VAT on petrol in UP appears to be lower than in around 20 states while diesel may be lower than in more than a dozen states.

“VAT on petrol and diesel in UP is definitely one of the most moderate in the country,” UP Petroleum Traders’ Association office-bearer Ashwani Attrish said over the phone from Noida.

“Moreover, UP is probably the only state that had not increased

VAT on the two petroleum products during the last five years,” he added.

The ministry’s data show that neighbouring Rajasthan, (as on January 1, 2022) charged VAT on petrol at the rate of 31.04% plus

Rs 1500 per kilolitre (KL) road development cess and taxed diesel at the rate of 19.30% plus Rs 1750 per KL road development cess.

In Madhya Pradesh, another neighbouring state, VAT was equally high at 29% VAT plus Rs 2.5 per litre additional VAT plus 1% cess. VAT on diesel in MP was 19% plus Rs 1.5 per litre additional VAT plus 1% cess.

In Bihar, VAT on petrol was 23.58% and 16.37% on diesel plus 30% surcharge on VAT as irrecoverable tax in case of both the products. VAT on petrol in West Bengal was 25% or Rs 13.12 litre plus Rs 1000/KL cess and on diesel VAT was 17% plus Rs 1000/ KL.

VAT on petrol in Maharashtra was 25% ( 26% in Mumbai, Thane, Aurangabad etc) plus Rs 10.12/litre additional tax while on diesel it was 21% (24% in Mumbai, Thane, Aurangabad etc) plus Rs 3 per litre additional tax.

Similarly, in Kerala, sales tax (VAT) was as high as 30.08% on petrol, plus Rs 1 additional tax plus 1% cess. The tax on diesel in the southern state was 22.76% plus Rs 1/litre additional tax plus 1% cess. Jharkhand charged VAT equally on petrol and diesel, that is 22% plus cess of Rs 1 per litre. In Karnataka, VAT on petrol and diesel was 25.92% and 14.34%, respectively.

In Telangana, VAT on petrol and diesel was as high as 35.20% and 27% respectively.

It was 28% and 24% respectively in Odisha. VAT on diesel in Andhra Pradesh was 31% plus Rs 4 per litre additional VAT plus Rs 1/litre road development cess. Diesel was taxed at the rate of 22.25% plus Rs 4/litre additional VAT plus Rs 1/litre road development cess.

VAT on petrol in Chhattisgarh was 24% plus Rs 2/litre additional VAT. On diesel, VAT was 23% plus Rs 1/litre additional tax in the same state.

Even after downward revision in November last year, VAT on petrol in Punjab was 13.77% plus Rs 2050/KL cess plus Rs 0.10/ litre urban transport fund plus Rs 0.25/litre special infra development fee plus 10% additional tax. In Haryana, VAT on petrol was 18.20% plus 5% additional tax on VAT. VAT on diesel in the state was 16% plus 5% additional tax on VAT.

At 19.40%, VAT on petrol in Delhi, too, was more than in UP while on diesel VAT in the state was 16.75% plus Rs 250/KL air ambience charges, which is lower than or at par with that of UP.

“Despite the lower tax on diesel and petrol in UP, the state’s tax income from the oil sector is the highest after Maharashtra,” a commercial tax official said here.

The petroleum ministry’s data also showed that UP collected Rs 21,965 revenue crore from petroleum products during 2020-21, which was next only to Maharashtra’s Rs 25430 crore .

Between April-September 2021, too, UP’s collection was Rs 11,914 crore against Maharashtra’s Rs 15,993 crore during the same six-month period, the provisional data showed.