Northern states and UTs agree to fix Uniform Tax Rates on Petroleum Products

Northern states of Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Union Territories of Delhi and Chandigarh have agreed to fix uniform tax rates on petroleum products, amid rising fuel prices. Besides, these states and UTs also have agreed to bring uniformity in taxes on liquor and registration of vehicles and transport permit.

Key Facts :

• Decision in this regard was taken at meeting of finance ministers of five states and officials of UT Chandigarh held in Chandigarh to deliberate on fixing uniform rate of taxes on petrol and diesel.
• The meeting was initiative of Haryana Finance and Excise and Taxation Minister Captain Abhimanyu.
• In this meeting it was decided to bring uniformity in VAT rates on petrol and diesel in order to provide relief to consumers.
• It was also decided to have uniform policy for state transport so that there should be no loss of revenue from registration and permit fees because of different tax rates.
• The participating states also decided to constitute a sub-committee, which would give their recommendation with regard to uniformity in tax rates in next fifteen days.
• Committee of officials has also been set up for excise and transport, which will send report to their respective state governments on the uniformity of rates.
• The price of petrol in Punjab is over Rs 88 a litre, around Rs 8 per litre costlier than that in Chandigarh. The state levies about 36 per cent VAT and surcharges on petrol.

Analysis :

• This decision will lead to increase in government revenue and at the same time curb black marketing.
• It will also help to curb diversion of trade.
• Notably, Punjab has one of the highest rates of VAT on petrol in the country and it is second to Maharashtra.
• It was seen that many trucks and vehicles of Punjab and Haryana get their registration done from other states.
• Northern states have shown consensus on having same tax rates on liquor also.

Question for Prelim :

Q. Northern states of Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Union Territories of Delhi and Chandigarh have agreed to fix uniform tax rates on which products, amid rising prices?
a. Plastic
b. Gold
c. Electronics
d. Petroleum

By: Harman Sandhu