BHUBANESWAR: The Odisha cabinet on Thursday approved authorising the finance department to enhance VAT on petrol and diesel as and when necessary with the approval of Chief Minister.
“Since prices of petrol and diesel are changing fortnightly, the state is losing revenue. There is a loss of revenue about Rs 417 crore per annum due to fall in prices. Now, the cabinet authorised the finance department to take a decision on hiking and decreasing tax on the two petroleum products,” said chief secretary Aditya Prasad Padhi.
He said due to gradual fall in the price of crude oil in the international market and deregulation of prices of petrol and diesel, there was a declining trend in prices of fuel, which affected VAT and Entry Tax collection.
“There is a decrease in collection of VAT and Entry Tax amounting to Rs 838.16 per kilolitre on petrol and Rs 1334.51 per kilolitre on diesel as on date, in comparison to December 15, 2014,” the Chief Secretary pointed out.
The centre, on the other hand, enhanced Basic Excise Duty, Additional Excise Duty/Special Excise Duty and cess from Rs 9,476 to Rs 19,360 per kilolitre of petrol, registering a hike of tax by 104.30 percent, he said.
Similarly, the Centre also enhanced Basic Excise Duty, Additional Excise Duty/Special Excise Duty and cess from Rs 3,563.80 to Rs 11,830 per kilolitre of diesel by which there was a hike of tax by 231.95 per cent, Padhi said.
He said the VAT rate on petrol and diesel was increased from 18 per cent to 20 per cent on June 18, 2014, and from 20 per cent to 23 per cent on December 25, 2014.
Therefore, he claimed, the state’s finance department needs to have the flexibility to increase or decrease the tax rate on petrol and diesel.