Jharkhand plans revenue boost by revising cess rate on fuel

Mail News Service

Ranchi: Amid increasing pressure to boost revenue, the Jharkhand government is exploring innovative methods to enhance its income without directly increasing the VAT rates on petrol and diesel. The Commercial Tax Department has proposed revising the cess on fuel to curb revenue losses caused by cross-border fuel purchases.

Currently, there is a price difference of Rs 3 to Rs 4 per liter for petrol and diesel between Jharkhand and its neighboring states like Uttar Pradesh. This price gap has encouraged large-scale consumers, such as traders who use thousands of liters monthly, to source fuel from neighboring states through tankers. This practice has resulted in a significant loss of revenue for Jharkhand.

A senior official from the Commercial Tax Department explained, “Instead of increasing VAT rates, which directly impact consumers, we are proposing to revise the cess. This move will ensure that purchasing fuel from other states no longer offers a cost advantage, thereby retaining revenue within the state.”

The proposed system would levy additional cess on fuel purchased from outside Jharkhand, ensuring that petrol and diesel prices remain uniform across states. This measure aims to dissuade traders from cross-border fuel procurement. The official added, “With fuel prices equalized, traders will have no incentive to source fuel from other states, and the state’s revenue loss can be mitigated.”

The state government is also under pressure from the central government to lower VAT rates. However, Jharkhand has resisted, maintaining its VAT on petrol at 22% since 2016. While the central government has provided relief to consumers by reducing central excise duty by Rs 8 per liter for petrol and Rs 6 per liter for diesel since 2022, the state government has opted to keep its rates unchanged.

Officials are optimistic about the new cess strategy, as it targets revenue generation without burdening the common man. A final decision on this proposal is expected soon.