India reduces petrol, diesel prices; Himachal levies tax to raise them

Shimla: Fall in global crude oil prices has forced the union government to reduce Petrol price by Rs 2.43 and diesel by Rs 3.60 on every liter consumed in the country, but the Himachal Pradesh government here imposed an increase in value added tax (VAT) that has increase Diesel prices by Rs 1.90 per liter from today onwards.

Ms. Tashi Katoch, Assistant Excise and Taxation Commissioner announced that VAT on Motor spirit including diesel, Petrol and Aviation Turbine Fuel (ATF) would henceforth be charged at therate of 16 percent per liter in comparison that of 11.50 per cent levied earlier.jack-up-the-price

The new applicable rates of VAT have been notified and posted on the department website online. The new rates came into effect last midnight (31.7.2015), said Ms Katoch.


It was at the cabinet meeting held on Jun 30, 2015 that a decision to increase VAT on diesel from 11.50 to 16 per cent was taken. With the increase in VAT on diesel, the state government hoped to get an additional income of Rs 50 crore annually.

“The decision has been taken not just to generate much needed revenue for the state but also to bring the VAT on diesel at a par with the neighboring states of Punjab and Haryana,” says Shrikant Baldi, principal secretary finance.

One of the major reforms undertaken by Prime Minister Narendra Modi in pricing of petroleum products was to free pricing control of diesel and linked it to market driven forces. Petrol was freed from pricing control earlier by the Manmohan Singh government.

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