The State government has recently reverted to the tax regime for petrol and diesel that prevailed from 2015 to 2018, in a bid to partially offset the loss of revenue caused by the COVID-19 pandemic.
The government, in a G.O. issued on July 20, asserted that the “overall prices will not exceed that existed between 2015 and 2018.” The ground reality, however, appears to be different.
Petrol was sold for ₹84.82 a litre and diesel for ₹80.94 per litre in Vijayawada on Monday.
The petrol and diesel prices were ₹79.47 per litre and ₹79.93 per litre respectively on July 20.
The previous TDP government had announced a reduction of tax on petrol and diesel by ₹2 per litre in 2018. Petrol was sold for ₹75.48 per litre and diesel for ₹71.32 per litre on June 1, 2019.
The government levied an additional tax of ₹4 per litre of petrol and diesel in February, 2015, apart from 31% VAT on petrol and 22.25% on diesel. The prices shot up to ₹65.85 (petrol) and ₹54.42 (diesel) on January 16, 2015 from ₹63.49 (petrol) and ₹52.19 (diesel) on January 17, 2015.
The prices increased steadily after imposition of additional tax of ₹4 per litre. The highest petrol and diesel prices reported were ₹79.26 and ₹71.43 respectively between January 1, 2015 and March 31, 2018, sources say.
The officials, however, evaded a direct reply when asked how the government would ensure that the overall prices of petrol and diesel would not exceed the prices prevailed between 2015 and 2018. Several States such as Karnataka, Uttar Pradesh, Rajasthan, West Bengal, and New Delhi made upward revisions of the taxes on the fuel in April and May to compensate the revenue loss.
“The prices in Telangana, and other southern States are not less than that of Andhra Pradesh,” says a senior official who did not want to be quoted.
Burden on exchequer
In September 2018, it was estimated that the decision to reduce additional tax would result in a burden of ₹1,120 crore per annum on the State exchequer.
It was estimated that the government would have to forgo a tax revenue of ₹ 820 crore on diesel, and ₹300 crore on petrol.
The official said that the decision to revert the older tax regime ‘would not help the government much.’
“At the best, the additional revenue will not be more than ₹300 crore to ₹400 crore. Still, there would be a gap of not less than ₹600 crore,” added the official.
