VAT exemption proposed to check fuel price hike

Chhattisgarh government is readying a proposal about not charging value added tax (VAT) on the amount increased recently for diesel and liquefied petroleum gas (LPG).

“The decision to this effect will be taken soon as the government is working on giving final shape to the proposal,” a senior state government official told Business Standard. The announcement would be made in a day or two, the official said.

The exemption would be such that it would bring some respite to the people from the recent price hike on the diesel and LPG. “Efforts would be to minimize the impact of the increased price and ensure people would not pay additional amount at par with the hike,” the official added.

The state government is considering not charging VAT on the amount increased recently for diesel and LPG. Besides, waiving VAT on kerosene was also under consideration with the government.

The official said that the burden on the state exchequer following the announcement had not been calculated. The officials of the department concerned are working on it and the burden will depend on the rate of exemption finalized by the government, he added.

At present, the state government is levying five per cent VAT on kerosene since 2006 while LPG was exempted from the orbit of VAT since 2008. On diesel and petrol, the state government was collecting 25 per cent VAT.

According to officials in the finance department, the government had collected about Rs 1,200 crore as VAT from kerosene and petrol-diesel. Since the amount is big and shares a major contribution on the taxes collected in the state, the government may consider bringing out VAT nominally, the officials hinted.