UP govt not to lower tax on petro products

The Uttar Pradesh government today clarified it was not considering to reduce tax rates on the various petroleum products in the backdrop of high inflation numbers.

The government maintained the tax rates had been fixed rationally keeping in mind both the financial requirements of the state and the interest of people.

Commercial Tax Minister Nakul Dubey said the government had already reduced the Value Added Tax (VAT) on kerosene sold under the public distribution system (PDS) and diesel compared to earlier trade tax. Besides, the domestic liquified petroleum gas (LPG) had been exempted from tax.

He was replying to a question in the ongoing monsoon session of the state Assembly.

The state introduced VAT in January 2008 and since its implementation, tax collection has improved as it effectively checked tax evasion.The house was informed, during 2009-10, UP had collected Rs 5,335 crore as VAT and Rs 76 crore as entry tax on petroleum products.

In UP, kerosene attracts VAT of 12.5 per cent and one per cent additional tax, however, under PDS, it is taxed at only four per cent. Petrol and diesel carry VAT of 26.55 and 17.23 per cent respectively.

According to official statistics, commercial tax realisation during last financial year stood at Rs 20,668 crore compared to Rs 17,404 crore in 2008-09 with a growth of around 18 per cent.

Besides, the stamp and registration department collected revenue of Rs 5,100 crore compared to Rs 4,652 crore in 2008-09. Entertainment Tax (ET) revenue improved from Rs 141 crore in 2008-09, to Rs 193 crore last financial year, a 37 per cent jump.

The facility of commercial tax e-payment launched last year has met with success and almost 20 per cent of Rs 20,668 crore tax was realised online.

The state has tied up with several public sector banks, including State Bank of India, Punjab National Bank and Bank of Baroda for e-payment. Talks with other public and private sector banks are also on.

Multiplexes are enjoying tax holiday and once they come under the tax umbrella, the collections will surge considerably.

Since, Uttar Pradesh is a consumer state, the commercial tax collection has the potential to double to Rs 40,000 crore annually under Goods and Service Tax, likely to be introduced from April 1, 2011.