The Delhi government has decided to reduce the Value Added Tax (VAT) on diesel from 18 per cent to 16.6 per cent owing to a drop in tax receipts from the sale of the fuel.

A litre of diesel in Delhi, which cost Rs. 44.71, will now come at Rs. 44.18. Diesel alone contributes around Rs. 150 crore per month to Delhi’s revenue collection. “Diesel prices in Delhi are marginally high, 50 paisa more per litre, compared to some districts of Haryana,” said an official with the Trade and Taxes Department. The prices of petrol will remain the same.

However, the odd-even scheme has adversely affected VAT collections from the sale of fuels. The data from the first round of the scheme in January shows that collection had dropped by Rs. 40 crore. Even the Delhi Petrol Dealers’ Association has been demanding uniform prices of diesel in Delhi and Haryana.

With a huge collection target of Rs. 24,500 crore, sources said that a 5 per cent VAT on CNG was likely to be introduced. “We are yet to take a decision on this,” said an official.

The imposition of VAT on CNG is likely to add revenue worth Rs. 156 crore every year, and generate Rs. 42 lakh every day.

In the Capital, there are about 3.5 lakh vehicles that run on CNG.