Due to reduction of 2% VAT, sale of fuel increased by 37%

Jaipur: The Rajasthan government’s move to fulfill Prime Minister Narendra Modi’s promise to reduce VAT on petrol and diesel has led to a significant increase in fuel sales in the state. The Bhajan Lal Sharma led BJP govt cut VAT by 2 percent, resulting in a uniform pricing structure for petrol and diesel across all districts. This move has led to a 37 percent rise in sales.

Moreover, the price difference between Rajasthan and neighboring states has decreased to less than half. Currently, diesel prices range between Rs 90.69 and Rs 91.69, while petrol prices vary from Rs 104.41 to Rs 106.28. Upon assuming power, the BJP government reduced the diesel tax rate from 19.30 percent to 17.30 percent and the petrol tax from 31.04 percent to 29.04 percent as of March 15, 2024. The transportation costs for oil marketing companies were also streamlined.

Earlier, the fuel prices were low in neighboring states such as Gujarat, Punjab, Haryana, Uttar Pradesh and Delhi, leading vehicles from Rajasthan to fill up in these states, causing losses for local petrol pump operators located near the state borders. With the VAT cut, this price gap has narrowed, boosting sales at petrol stations near state borders.

Petrol revenue has increased by 8.54 percent in April and May 2024.

However, despite the rise in sales, revenue from diesel has dropped by 13.84% compared to the previous year. This discrepancy is largely attributed to the rule of blending 7% biodiesel in diesel and up to 15 percent ethanol in petrol.

The associated revenue from these blended fuels goes to the central government due to GST.