VAT Hike Leads to Fuel Price Increase in Punjab, Affecting Petrol and Diesel Costs

Petrol and diesel prices in Punjab will rise by 61 paise and 92 paise per litre, respectively. This follows the state Cabinet's decision to increase value-added tax (VAT) on fuel. The council of ministers, led by Chief Minister Bhagwant Mann, made this decision during a meeting.

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Impact on Fuel Prices

Currently, petrol in Mohali costs Rs 97.01 per litre, while diesel is priced at Rs 87.21 per litre. In contrast, Chandigarh's petrol and diesel prices are Rs 94.24 and Rs 82.40 per litre, respectively. This makes fuel more expensive in Punjab compared to the Union Territory of Chandigarh.

The Cabinet approved raising VAT on diesel from 12% to 13.09% and on petrol from 15.74% to 16.52%. Additionally, the state government imposes a 10% surcharge on VAT. Finance Minister Harpal Singh Cheema stated that this hike would increase revenue by Rs 395 crore from diesel and Rs 150 crore from petrol.

Reactions from Fuel Pump Owners

Fuel pump owners have strongly criticised the AAP-led government's decision, stating it will severely impact their business. They noted that this is the third time the Bhagwant Mann government has raised fuel prices in the past two-and-a-half years.

Monty Sehgal, spokesperson for the Petrol Pump Dealers Association in Punjab, expressed concerns that sales in border districts would decline as consumers might opt for cheaper fuel in neighbouring states. Ashwinder Singh Mongia, a fuel pump owner in Mohali, warned that this move could encourage fuel smuggling, reducing tax revenue for the state.

Opposition Parties' Criticism

The opposition parties have also condemned the VAT hike on fuel. Senior Shiromani Akali Dal (SAD) leader Bikram Singh Majithia accused the Aam Aadmi Party (AAP) government of penalising ordinary citizens and farmers with this decision. He argued that increased transportation costs would lead to higher inflation.

Majithia highlighted that farmers relying on diesel for agricultural activities would be significantly affected by the VAT increase. He also pointed out that AAP had promised to reduce VAT on fuel but was now doing the opposite in government.

Comparative Fuel Prices

Mongia mentioned that fuel prices are lower in Himachal Pradesh and Jammu and Kashmir compared to Punjab. In Jammu, petrol costs Rs 95.41 per litre and diesel Rs 81.26 per litre. In Una, Himachal Pradesh, petrol is priced at Rs 93.2 per litre and diesel at Rs 85.57 per litre.

Senior Congress leader Partap Singh Bajwa echoed these concerns, stating that the VAT hike would not only burden farmers but also contribute to rising inflation.

The decision to increase VAT on fuel has sparked widespread criticism from various quarters, including opposition parties and fuel pump owners, who fear its economic repercussions.