Lagatar24 Desk
Ranchi: The Jharkhand government has decided to reduce the VAT (Value Added Tax) rate on diesel purchased for mining and industrial use from 22% to 15%. This strategic move is expected to generate an annual revenue of ₹634.55 crore for the state, while providing industries diesel at a lower price of ₹87.48 per litre.
However, the reduced VAT benefit will not be extended to common citizens, who will continue to pay ₹92.81 per litre for diesel.
Why Did the Government Reduce VAT?
A review conducted by the state government revealed that coal companies and mining industries were purchasing diesel in bulk from depots in Uttar Pradesh (Mughalsarai) and West Bengal (Durgapur) due to the higher diesel price in Jharkhand.
During the financial year 2023-24, Jharkhand recorded diesel sales of 1912 thousand kilolitres, valued at ₹14,351 crore, generating revenue of ₹3,157 crore. However, industries purchased only 96.60 TKL (thousand kilolitres) of diesel within the state, while a whopping 358 TKL was purchased from outside the state, resulting in significant revenue loss.
This led the government to cut the VAT rate for industrial bulk diesel purchase to make it competitive with neighbouring states.
Key Highlights:
• State’s mining and coal industries will now get diesel at ₹87.48/litre after VAT cut.
• General consumers will still pay ₹92.81/litre for diesel.
• Jharkhand expects to recover lost revenue from industries purchasing diesel from other states.
• Diesel prices in Mughalsarai (UP) and Durgapur (WB) are lower than Jharkhand, prompting industries to buy from there.
• The VAT cut aims to prevent revenue leakage and encourage local diesel procurement.
