Diesel sale on Telangana border falls 40% due to VAT

Hyderabad: Purchase of diesel in TS has dropped by 40 per cent, primarily at the inter-state borders, national and state highways according to estimates of diesel sales in Telangana state that were collated from oil marketing companies (OMCs) and petroleum dealers.

The static value added tax (VAT) levied by the TS government is the cause for the fall in purchase of fuel, dealers said. On October 24, the diesel price per litre was Rs 81.42, which made it more expensive  here than in Maharashtra (Rs 78.80), Karnataka (Rs 75.24), Tamil Nadu (Rs 79.65) and Andhra Pradesh (Rs 80.48).

Since April 1, the state has lost Rs 4,860 crore in tax revenue, as fuel that would normally be purchased in TS was purchased more cheaply outside the state.

Around 80,000 heavy vehicles that run on diesel, and ply in and out of TS on a daily basis constitute the largest diesel purchasers in the state. Records show that per day dealers are losing sales of Rs 24.3 crore. The sale of diesel per day in October 2017 was 21.60 lakh litres, which dropped to 13.52 litres, a difference of 8.08 lakh litres a day.

Rajiv Amaram, a petroleum dealer, said, “Telangana state is losing Rs 22 per litre of diesel on VAT and another Rs 5 which is the state's share of 42 per cent excise duty imposed by the central government. Since April 1, the state has lost revenue (tax) of Rs 4,860 crore on the revenue generated through diesel. Recently, the dealers called for a two-day bandh in Delhi because Haryana and UP reduced their price and Delhi didn’t. Dealers in TS cannot take a step as there is no government in place.”

Dealers told this newspaper that because the price of diesel is so high in TS, custom is being diverted to bordering states. This means that other states are benefiting by getting extra revenue as their sales go up. The state receives a major share of its revenue from petroleum products. Recovering losses could be a major task. Around 30-40 per cent of dealers are severely affected by the high price.

Shiv Ram whose bunk is located on the Maharashtra-Pantancheru highway, said, “Trucks and buses refuel in Maharashtra before they enter TS and refuel once they exit. Also, a few dealers are billing in other states and supplying in TS.”

Vinay Kumar, general secretary of the TS Petroleum Dealers’ Association added, “Diesel purchases dropped by 40 per cent only because of its high price. TS is losing the 27 per cent VAT on diesel and also the 42 per cent on the total excise duty imposed by the central government.” 

So far the state government, unlike other states in the South, has not reduced its VAT. The dealers don’t see any scope in reduction of VAT slabs, given that a running government needs to take a call. However, the Chief Secretary of the state can take up the mandate, if the citizens demand for it.