Delhi: The price of diesel went up by ₹7.10 a liter in Delhi and that of petrol by ₹1.67 per liter today after the Delhi government increased value-added tax (VAT) on the two auto fuels.
Petrol prices in Delhi rose to ₹71.26 a liter as against ₹69.59 per liter while diesel rates climbed to ₹69.39 a liter as against ₹62.29. VAT on petrol has been increased to 30% from 27% while VAT on diesel has been almost doubled to 30% from 16.75% by the Arvind Kejriwal government in Delhi.
State governments faced massive revenue losses during the coronavirus lockdown. The lockdown has been extended now for the second time. This is the reason several state governments increased VAT on fuels that are currently out of the purview of goods and services tax (GST).
In the neighboring Haryana, the state government had recently hiked tax by ₹1 per liter on petrol and ₹1.1 per liter on diesel. In Chennai, the petrol price went up ₹3.25 per liter and that of diesel by ₹2.50 per liter after the Tamil Nadu government hiked VAT.
Although petrol pumps have been under the essential services category all throughout the lockdown period, yet sales have fallen drastically due to the shutting down of industries, offices, and restrictions on the movement of vehicles. Petrol sales were down by 61% and diesel 56.5% in April but as the economy sees a staggered opening and relaxation in lockdown norms at several places, the demand is expected to pick up this month.
Since March 16, oil marketing companies have not made any changes to the base selling price of both petrol and diesel but a hike in VAT by several state governments like West Bengal, Karnataka, and Tamil Nadu has led to an increase in retail prices.
Although crude oil rates have plummeted more than 60% yet the state-run fuel retailers have not been able to cut prices in the Indian market due to inventory losses and falling demand.