The Telegraph
Tuesday , July 29 , 2014
CIMA Gallary

Meet to pare diesel levy

New Delhi, July 28 (PTI): Levies imposed by states add up to Rs 7 a litre to the price of diesel, which the Centre feels can be cut to bring down the price of the fuel.

To convince them to reduce these duties, petroleum ministry officials will meet representatives of 12 states with the highest incidence of taxes such as octroi and entry tax.

A litre of diesel in Calcutta costs Rs 62.64, in Delhi it is Rs 57.84, in Mumbai it costs Rs 66.01, while in the rest of Maharashtra it is priced at Rs 65.99. This difference is primarily because of higher local sales tax, or VAT, and levy of state-specific taxes such as octroi and entry tax on the fuel.

The petroleum ministry, on instructions from oil minister Dharmendra Pradhan, has initiated the consultation process with the states, a top official said.

On July 9, the ministry wrote to the state governments on the issue and has now called a meeting to impress upon them the need for a uniform taxation policy and the abolition of state-specific multiple levies, he said.

The ministry officials will meet representatives from Assam, Bihar, Haryana, Karnataka, Uttarakhand and Kerala on July 30-31.

Another meeting with officials from Bengal, Maharashtra, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh has been scheduled for August 5-6.

“State-specific levies add up in the price of petrol and diesel and this is borne by the consumers. For example, in some cities of Maharashtra, state-specific multiple levies add between Rs 4 and Rs 7 to the price of diesel,” he said.

Diesel in Bengal costs Rs 62.64, while the same is priced at Rs 61.70 in Tamil Nadu. In Madhya Pradesh, it costs Rs 63.94, Rs 62.21 in Uttarakhand, Rs 63.25 in Uttar Pradesh, Rs 62.85 in Karnataka and Rs 63.04 in Andhra Pradesh.

Similarly, petrol in Calcutta costs Rs 81.43, in Delhi it costs Rs 73.54, while in Mumbai it costs Rs 81.68 and the rest of Maharashtra Rs 82.16.

“Our experience has showed that states with these levies have seen sales volumes shift to neighbouring states with no or lower rate of taxes,” the official said.

If states do away with these levies, price of petrol and diesel in those places will fall, benefiting local population.