Delhi government to rollback VAT hike on diesel

This move was a long time coming. Earlier this year on May 5, the Delhi state government had decided to increase the Value Added Tax (VAT) on the retail of petrol and diesel in the national capital, in order to compensate for the loss of revenue during the nation-wide lock-down.

As a result, while the existing 27 percent VAT on petrol was marginally hiked to 30 percent, diesel saw a steep increase from 16.75 percent to 30 percent in the union territory. Subsequently, fuel prices have seen a consistent upward march over the last several weeks, leading to setting of new records.

On June 20, prices of petrol and diesel registered a 20-month high with petrol retailing at Rs 78.88 per litre and diesel at Rs 77.67 per litre in the national capital, thus narrowing down the price gap between the two fuels to merely Rs 1.21 per litre. This gap further went to get toppled with diesel eventually surpassing the price of petrol to retail at Rs 79.88 a litre on June 24 in the city.

Considering the worsening situation, the Delhi government today announced that it has decided to rollback the VAT hike on diesel so as to improve the retail price situation of the fuel in the city.

As per a PTI report, prices of diesel will be slashed by Rs 8.36a litre in Delhi due to the VAT cut, as announced by Chief Minister Arvind Kejriwal in a virtual press conference after the decision taken by the Delhi cabinet chaired by the CM.

The reasons cited for the rollback include the government facing a serious challenge to revive the economy of the state as well as a persistent demand from the city’s traders and industrialists amidst the already subdued business atmosphere.