The Delhi Government reduced the price of petrol by more than ₹8 per litre earlier this month primarily because it was losing out on revenue from the sale of petrol as it was costly compared to Noida and Gurugram, an official source told The Hindu .
The Government had projected the move as one to provide “relief from inflation” to the people and did not mention the fall in sale of petrol in the city or revenue to the Government.
“In October and November, both sale of petrol in kilolitres and the VAT (value added tax) collected from it by the Government fell as petrol was costly in Delhi. The decision to cut VAT on petrol was taken with an aim to make it cheaper and thus, increase the sale of petrol and Government’s revenue from it,” the source said.
The Government slashed the price of petrol by reducing VAT it collects for every litre of petrol sold to 19.42% from 30%.
The source said there was a 25%-30% fall in VAT the Government collected from the sale of petrol in the first three weeks of November compared to August-September.
But in an official statement on December 1, the Delhi Government had said, “Chief Minister Arvind Kejriwal held an in-depth discussion with the Cabinet on how the general public can be provided relief from the back-breaking inflation. The CM expressed deep concern for the people in the current situation and was of the view that it is essential for the Government to reduce prices at this juncture to support the public. The Delhi Cabinet, chaired by Chief Minister Arvind Kejriwal, has decided to provide relief to the people by reducing the rates of VAT on petrol. Delhi’s VAT rates are now at a historic low.”
When asked about a fall in amount of tax collected being the reason behind reducing rate of VAT, an official working closely with the Chief Minister’s Office said, “It was not mentioned in the Cabinet note [of Cabinet meeting concerned] that the VAT [on petrol] was reduced due to a fall in revenue.”
But he did not give further details.
“Despite multiple attempts, the Delhi Government spokesperson did not offer a comment.”
In May last year, the Delhi Government had increased the VAT on petrol to 30% from 27% and that of diesel to 30% from 16.75%.
Currently, petrol is cheaper in Delhi than Noida and Gurugram, which borders the national capital, and many petrol-filling stations have advertised it too.
“Petrol, Diesel now cheaper than Noida/Gurugram/Faridabad available in Delhi,” reads a flex at a filling station.
Sales pick up
Delhi Petrol Dealers’ Association spokesperson Nishit Goel said petrol was cheaper by ₹2 per litre in Noida compared to Delhi in October and ₹8 per litre in November.
“People were filling petrol from Noida and because of this, the sale of petrol in Delhi was down by one-third in November. We wrote letters to the Chief Minister and Deputy Chief Minister. Later, we met the Deputy CM and requested him to reduce the VAT on petrol. Only after that, the Government slashed the rates,” Mr. Goel said.
He said that petrol sales have picked up now and the amount of petrol sold by dealers is currently about the same level as in August.