On the day when oil companies reduced rates on motor fuels and the Central government increased the excise duty on them, the Telangana government imposed Value Added Tax of Rs. 2 a litre on petrol and diesel. However, this burden will not be passed on to the consumer but absorbed by the oil companies.
The VAT was imposed in addition to the 31 per cent and 22.25 per cent sales tax on the issue price of petrol and diesel respectively that was already recovered by the Telangana government from oil companies.
But, the net impact to the end consumers was petrol being cheaper by 53 paise per litre and diesel by 44 paise per litre because the hike in excise duty and VAT got adjusted against the downward trend in crude oil prices globally, according to Ch. Srinivas, State-level coordinator for oil marketing companies.
