With little more than a month to the state budget, petrol dealers have again started lobbying for a cut in value added tax (VAT) on diesel. According to Delhi Petrol Dealers’ Association (DDPA), Delhi’s diesel dealers have lost business to Haryana where diesel costs Rs. 1.50 less than Delhi due to less tax. VAT on diesel in Delhi is 20% while it is 12.5% in Haryana. The fuel is priced at Rs. 47.63 a litre in Delhi.

According to DPDA vice president Nishit Goel, the dealers, especially those close to the Haryana border and on Ring Road, have lost 50%-75% of their business to Haryana.

“The difference in the prices has also encouraged the fuel’s smuggling. Several tankers of diesel enter Delhi every day. The transporters as well as the car owners prefer to buy the fuel from Haryana. Even bulk purchasers such as the railways and industries have started sourcing diesel from other states,” Goel said.

DPDA members said Delhi’s VAT revenue from diesel was Rs. 636 crore in 2008. “Despite 48% increase in diesel prices in past four years, the revenue has come down to Rs. 576 crore per annum,” a DPDA member said.

Petrol dealers said they have again written to the Delhi government to reconsider their demand for a cut in the tax on diesel. A senior Delhi government official said they are examining the demand of the petrol dealers.