VAT cut on fuel not to dent State revenue

Special Correspondent

HYDERABAD: A cut in valued added tax (VAT) on petrol and diesel to provide relief to the consumers will be revenue neutral considering the high tax rate in Andhra Pradesh.

With VAT on petrol being 33 per cent and on diesel 22.25 per cent, there will be no dent on the State exchequer if the government takes suitable measures as it did in the case of liquefied petroleum gas (LPG) by absorbing the additional burden of Rs. 50 for each cylinder.

Enquiries with the Finance and Commercial Taxes Departments reveal that the government will earn an additional revenue of Rs. 150 crore even after absorbing the entire burden of the hike in LPG prices.

Going by Finance Minister K. Rosaiah’s own statement, the total annual outgo on account of the subsidy on LPG is estimated at Rs. 300 crore, a figure arrived at on the basis of gas cylinders sold to domestic consumers.

As against this outgo, the government has received a virtual windfall of Rs. 450 crore by way of additional VAT collection when the Centre increased the prices of petrol and diesel.

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