Higher VAT: Delhi’s diesel sales drop 79% in May

Transportation fuel – diesel’s sales dropped by 79 per cent last month in the national capital, said the city’s fuel pump dealers.

According to the Delhi Petrol Dealers Association (DPDA), the decision to increase VAT, although taken with a good intention to increase revenue is proving to be counterproductive as the city is losing both sales and revenue.

The state VAT rates on ‘Petrol & Diesel’ were increased to the highest slab of 30 per cent on May 5.

Lately, diesel sales had dropped in April by 84 per cent compared to historical sales.

“Even with partial unlocking of the state in May, the sales drop in diesel is still at (-) 79 per cent (YoY),” the association said in a statement.

“Whereas the neighbouring states of Haryana and Uttar Pradesh have recovered most of their diesel sales.”

Consequently, a massive rate difference of around Rs 7 per litre has occurred between Delhi and its neighbouring states.

“The vehicles bringing in essential commodities to Delhi were fueling from Delhi till May 5, 2020, however with such a rate difference these vehicles are now fueling from neighbouring states,” the statement said.

The association has written again to the Delhi government to reduce VAT on petroleum products.