JOIN US"We have decided to decrease the VAT on diesel from 20 percent to 12.5 percent effective July 20. This is likely to bring down the prices of the fuel in the capital," Chief Minister Sheila Dikshit said, announcing the decision.
Diesel now costs Rs.40.10 a litre in the capital and after the decrease in VAT, it will cost Rs.38.40.
In March, the government had increased the VAT on diesel from 12.5 percent to 20 percent to mop up revenue for the increased expenditure on infrastructural projects for the Commonwealth Games 2010.
Petrol pump owners have been protesting against the hike in VAT, saying vehicle owners are getting diesel filled from neighbouring states as Delhi had the highest VAT on the fuel.
"It was necessary to reduce the VAT on diesel as petrol pump owners were facing losses," Dikshit said.
However, her government's decision to slash the VAT on diesel evoked mixed reactions from petrol pump dealers as some of them are demanding a further cut in the VAT.
"We are not happy with this decision as we have asked the government to bring parity in VAT in Delhi and Haryana. The VAT on diesel in Haryana is 8.8 percent and in Delhi it is still 12.5 percent. We will soon meet the Delhi chief minister and finance minister," said Nishit Goyal, vice president, Delhi Petrol Dealers Association.
Sunil Kumar, manager of a petrol pump in Paschim Puri, said: "Last few weeks had been awful for us. Our business was suffering tremendously due to the increase in the prices of diesel as compared to other states. But now I think things will improve."
Tanay Gupta, owner of Gupta service station in Moti Bagh, said: "The decrease in VAT will ultimately benefit the consumers who have been reeling under rising prices of essential commodities."