Chandigarh: Petrol and diesel prices are set to get costlier in Punjab, following the state government's decision to hike value added tax (VAT) by 0.5 percent, dealers said on Wednesday.
Retail price of petrol and diesel will increase by 42 paise a litre and 30 paise a litre respectively with the hike in VAT rates, they added.
"Due to increase in VAT rates, there is going to be an increase of 42 paise per litre in petrol and 30 paise in diesel," Punjab Petroleum Dealers Association President J P Khanna told on Wednesday.
Punjab Cabinet in its meeting yesterday raised VAT rate by 0.5 percent from the existing rates, though declared goods have been exempted.
"The VAT rate has been hiked by 0.5 percent across the board except gold and silver," Punjab Excise and Taxation Commissioner A Venuprasad said.
At present, Punjab levies VAT at a rate of 27.50 percent on petrol and 8.8 percent on diesel.
With raise in VAT rates, the new rate of VAT on petrol and diesel will be 28 percent and 9.3 percent.
A surcharge of 10 percent on VAT is also levied on petrol and diesel while Rs 1 per litre as cess is imposed on petrol, fuel pump owners said.

Punjab collects tax revenue of about Rs 2,000 crore annually from petrol, diesel, ATF and LPG.
With the hike in VAT, diesel price in Punjab will be more expensive than that of Haryana, though it will continue to be less than the price prevalent in UT Chandigarh.
At present, diesel price in Punjab (Amritsar) is about Rs 40.16 a litre while in Haryana (Panchkula), it stands at Rs 40.13 a litre. In Chandigarh, diesel is priced at Rs 41.93 a litre.
However, the gap between petrol price of Punjab and other neighbouring states Haryana and UT Chandigarh will further widen with hike in VAT rate.
Already, petrol in Punjab is dearer by Rs 5-6 per litre in comparison to neighbouring states.
Petrol is being sold at Rs 74.26 (Amritsar) a litre, while in Haryana (Panchkula) and Chandigarh, it is priced at Rs 69.46 and Rs 69.98 a litre, respectively.
The state government after coming to power this year abolished octroi on fuel with in the municipal limits of towns and cities, giving a relief of 0.73 paise in petrol and 0.82 paise in diesel a litre to the public.
The daily sale of petrol and diesel in Punjab is pegged at 5,700 Kilolitre (KL) and 9,500 KL, repsectively.
Strongly opposing the Punjab government's move to raise the VAT rate, fuel pump owners said the increase in taxes would hit business volume as buying will shift to neighbouring state of Haryana.
"By imposing more taxes, government is not going to get more revenue. Rather such kind of moves hit the trade adversely," Khanna said.


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