The Hindu : New Delhi News : Sales tax on diesel likely to go up

Online edition of India's National Newspaper
Monday, Jul 19, 2004

New Delhi

New Delhi

Sales tax on diesel likely to go up

By Sujay Mehdudia

NEW DELHI, JULY 18. Faced with a tough financial situation, the Delhi Government is likely to hike the sales tax on diesel from 12 to 20 per cent, introduce a new passenger goods tax for commercial vehicles coming in to Delhi and also impose an "environment cess" on diesel vehicles. The Government is still debating the pros and cons for imposing a two to four per cent sales tax on CNG fuel.

Authoritative sources in the Government said it had already made up its mind to hike the sales tax on diesel to 20 per cent bringing it at par with the neighbouring States of Haryana and Uttar Pradesh. This is expected to generate an additional revenue of Rs. 150 crores for the Delhi Government during the current financial year. Officials pointed out that in some Southern Indian States, sales tax on petrol and diesel ranges from 25 per cent to 38 per cent.

In addition to this, the Government is also likely to go ahead and impose a passenger goods tax on commercial vehicles that transit the Capital carrying inter-State passengers. In the recent past, the number of such vehicles has gone up drastically and as a result the State was losing out on a major source of revenue. There is also a proposal to impose a two per cent cess on diesel vehicles. However, even if this proposal is introduced in this budget, the Government would have to seek the mandatory sanction of the Central Government as Delhi Government does not have the power to levy a cess on its own. The Government is divided on the issue as officials fear that this could force the vehicle owners to register and buy vehicles from Haryana or Uttar Pradesh causing a revenue loss to the Government.

The budget is also likely to unleash the new road tax regime that is expected to bring an additional Rs. 50 crores revenue to the Government. At present, vehicles are asked to pay road tax on the basis of the laden weight of the vehicle. With the new regime in place, the road tax would be charged on ad volerm basis. Vehicles up to Rs. 4 lakh would have to pay a two per cent tax and those above Rs. 4 lakh would have to shell out 4 per cent road tax. Officials have ruled out any kind of concessions or exemptions, as the right financial situation does not allow any such leverage. It is learnt that a section of the officials associated with the budget making exercise have recommended a two to four per cent sales tax on CNG fuel. However, the Government is divided on this issue and a final decision is expected to be taken by the Chief Minister, Sheila Dikshit, who is going to give final touches to the budget.

According top priority to the public transport issue, the budget is likely to include measures like initiation of work on the elevated Ring Road project and the Electric Trolley Buses. The Chief Minister is very keen on the elevated Ring Road project and wants it to take off by the end of this year as an alternative to flyovers. The budget could also announce measures in the education sector including giving more thrust to computerisation in Government schools and also enhanced allocation for carrying out works in the unauthorised colonies. There could be announcement regarding setting up of a new power plant at Bawana and major renovation of the Indrapratha Power Plant that could cost around Rs. 400 crores giving the power sector a boost.

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