New Delhi, July 30: Delhi Chief Minister Arvind Kejriwal on Thursday decided to reduce the value-added tax (VAT) on diesel from 30 percent to 16.75 percent. Much to the relief of residents of the national capital, the reduction in VAT on diesel will lower the diesel prices in Delhi. With the latest development, the price of diesel in Delhi will reduce from Rs 82 to Rs 73.64 i.e. by Rs 8.36 per litre, Kejriwal announced. The VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.
People in Delhi have witnessed frequent hike in the prices of petrol and diesel in the last few months, 23 times in June alone. Earlier this month, petrol pump owners in the national capital had urged the AAP government in Delhi to reduce VAT on petroleum products, citing lower rates in neighbouring states. According to reports, in June, the drop in diesel sales in Delhi was 64 percent as compared with the national average of drop of 18 percent. The drop would certainly result in loss of revenue of more than Rs 380 crore, reports said. Petrol, Diesel Prices Hiked in Delhi on May 5 as Delhi Government Increases VAT.
Here's the tweet by Delhi CM Arvind Kejriwal:
Delhi Cabinet has decided to reduce VAT on diesel from 30% to 16.75%. This will reduce price if diesel in Delhi from Rs 82 to Rs 73.64 i.e. by Rs 8.36 per litre | LIVE https://t.co/UDKzuSQJI9
— Arvind Kejriwal (@ArvindKejriwal) July 30, 2020
The VAT on petroleum products contribute a big percentage to the total revenue. On May 5, the Delhi government had increased VAT on petrol to 30 per cent from 27 percent. For diesel, VAT has been almost doubled to 30 percent from 16.75 per cent, reports said. "Delhi Government increases VAT on petrol from 27 percent to 30 percent, and on diesel from 16.75 percent to 30 percent . Price of petrol increased by Rs 1.67 & diesel by Rs 7.10", the statement by the Delhi Govt read.