Pune Petrol Costliest in India

While there is much hoopla over whether there will be an increase in prices of petrol and diesel in the country, Puneites will bear the brunt most. The reason : Already petrol and diesel are costliest in the country.

While rest of the country sells fuels without less taxes, in Pune it is already reeling under the burdens of taxes. While unleaded petrol costs Rs. 45 in New Delhi, it is priced Rs. 51.64. Same story is repeated for diesel which is sold at Rs. 38.45 per litre in Pune. Petrol dealers and oil company officials differ on the exact reasons behind this inequitable situation.

There are mainly two factors making petrol and diesel more expensive to puneites. Pune Municipal Corporation not only charges octroi tax on petrol, it charges it on Value Added Tax. PMC in the past used to charge 4 percent octroi on the basic price of petrol. But since 2005, it has started to charge 4 percent octroi tax on the VAT-included price.

Besides octroi, it is the sales tax which contributes to the prices of petrol being increased. Accroding to N. M. Sommaiya of Indian Oil Corporation, "Prices of fuel at a particular place depend upon sales tax and octroi and fret. Maharashtra has the second highest sales tax in the country. State charges 28 percent of sales tax on petrol compared to 33 percent in Andhra. Earlier the state had 32 percent of tax which was brought on the current level two years ago."

PMC on its part has announced last month to reduce octroi from 4 percent to 2 percent. That is expected to bring about a reduction of almost Rs. 2 in the prices of petrol, bringing it to Rs. 49.74 per litre as it is in Pimpri Chinchwad Municipal Corporation area. As things stand today, only Mumbai, Nagpur and Pune municipal corporations charge octroi on petroleum products.
The Solution
As for every problem, this problem also has a solution. But parties involved in the matter do not see it nearby.
Baba Dhumal, Vice President, Federation of All India Petrol Dealer’s Association blames sales tax for the heavy price. He said, "We met unio petroleum minister Murali Devra in connection with this matter at least four times. We had requested to keep price of petrol uniform all over the country. High amount of sales tax takes petrol prices to higher level. But there is no action."

According to Somaiya, bringing sales tax to a uniform level all over the country is the only solution. "It can not be abolished, but it can be reduced. State can levy an uniform sales tax but for that a greater co-ordination and consensus is required. States are not willing to do away with their revenue. Therefore it is unlikely that this will come into reality unless Centre puts a pressure on them to do it. Looking at the current situation we are in, that is the thing most needed," said Somaiya.

(Published in Pune Mirror on 30 May)