New Delhi: Petrol and diesel prices will go up by 61 paise a litre and 92 paise a litre, respectively, in Punjab, with the state Cabinet on Thursday deciding to increase value-added tax (VAT) on fuel.
A decision in this regard was taken by the council of ministers in a meeting chaired by Punjab Chief Minister Bhagwant Mann here.
At present, the retail price of petrol in Mohali stands at Rs 97.01 per litre and diesel is priced at Rs 87.21.
Already, the fuel is more expensive in Punjab than in Chandigarh.
In the Union Territory of Chandigarh, prices of petrol and diesel are Rs 94.24 and Rs 82.40 per litre, respectively.
Fuel pump owners strongly condemned the decision of the AAP-led government, saying it would hit their business hard.
They further said it is the third time that the Bhagwant Mann-led government raised fuel prices in the past two-and-a-half years.
The Cabinet approved to raise VAT on diesel from 12 percent to 13.09 percent and increased tax on petrol from 15.74 percent to 16.52 percent. The state government also levies a 10 percent surcharge on VAT.
Addressing the media after the Cabinet meeting, Finance Minister Harpal Singh Cheema said the decision has been taken to raise VAT on petrol and diesel.
He said VAT on petrol will be raised by 61 paise and 92 paise a litre for diesel.
Cheema said the hike in VAT on fuel will lead to an increase in revenue by Rs 395 crore from diesel and Rs 150 crore from petrol.
Reacting to the hike in VAT on fuel, Petrol Pump Dealers' Association, Punjab, spokesperson Monty Sehgal criticised the state government's decision.
He said with the hike in VAT on fuel, the sales of petrol and diesel located in border districts will be impacted as their business will shift to neighbouring states where the fuel is less expensive.
Mohali-based fuel pump owner Ashwinder Singh Mongia said this move will encourage more "smuggling" of fuel, which will ultimately lead to a reduction in tax revenue to the state.
He said fuel in Himachal Pradesh and Jammu and Kashmir is cheaper than in Punjab.
Mongia said in Jammu, the price of petrol and diesel stood at Rs 95.41 and Rs 81.26 a litre while in Himachal Pradesh's Una, the price was Rs 93.2 per litre for petrol and Rs 85.57 for diesel.
Meanwhile, the opposition parties strongly condemned the hike in VAT on fuel.
Senior Shiromani Akali Dal (SAD) leader Bikram Singh Majithia said the Aam Aadmi Party (AAP) government "penalised" the ordinary man as well as farmers in Punjab by hiking VAT on petrol and diesel.
He said a 61 paisa and 91 paise per litre increase in VAT on petrol and diesel would increase the transportation cost of essential goods and result in a spike in inflation.
He said farmers, who depended on diesel for their agricultural activities, had also been hard hit by the VAT increase.
Asserting that the AAP had promised to reduce VAT on fuel, Majithja said, "The party is doing the exact opposite in government". He demanded the increased VAT be taken back immediately.
Senior Congress leader Partap Singh Bajwa said the hike in VAT on fuel will not only cost dearly to farmers but also add fuel to inflation.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)