Petrol, diesel prices up in Delhi

The price of petrol has gone up by 67 paise a litre here in the Capital. Diesel has become costlier by 22 paise a litre.

The increase in prices came into effect from midnight on Tuesday night.

The Delhi Government attributed the increase to "corrective measures" taken by the oil companies in fuel pricing that was purportedly causing a loss of nearly Rs. 11 crore per month to the State exchequer on account of faulty computation of Value Added Tax (VAT).

According to a Delhi Government spokesperson, there was a discrepancy in computation of VAT by the oil companies in the wake of the fuel price increase announced by the Union Government on June 6 last year and two subsequent reductions on November 30, 2006, and February 16 this year.

The spokesperson said the companies were computing VAT by forgoing the amount equivalent to VAT on the enhanced portion of petrol and diesel prices on June 6 last year. Following the two reductions, the price structure had gone back to the pre-hike status but the oil companies continued to calculate VAT on the basis of the increased prices. The Delhi Government also said that the relief of forgoing VAT was only a one-time measure enforced by amending VAT-2004. This was because the Union Government had requested the Delhi Government to forgo VAT even as it increased the fuel prices on June 6, 2006.

It was further clarified that there had been no decision on the part of the Delhi Government to increase VAT, which continued to be charged at the rate of 20 per cent for petrol and 12.5 per cent for diesel.

While most Delhiites got to know about the latest increase in fuel prices only on Wednesday morning, petrol pumps had hiked the prices beginning midnight on Tuesday night.