CHANDIGARH: Four months after Punjab took an exception to its neighbouring states over reducing value added tax (VAT) on fuel to give relief to consumers, state finance minister Manpreet Singh Badal on Monday announced a cut of Rs 5 on petrol and Rs 1 on diesel to check losses on business to state's petrol pumps located on the inter-state borders.While presenting the budget for 2019-20 before the state assembly, Manpreet said, "At present the rates of VAT on petroleum products are on higher side in the state as compared to neighbouring states."Though petrol will continue to be cheaper in the union territory of Chandigarh even after the reduction, Manpreet said Punjab would take up the matter with the Union finance ministry so that rates are brought at par.To justify the change of heart, Manpreet said, "Encouraged by the buoyancy of our revenue receipts and better cash flow management practices adopted by our government, we will take measures to rationalise the rates of VAT. It is expected that the party in VAT on fuel will result in relief to the end consumers." He added, "Petrol pumps in the districts bordering other states have been incurring huge losses. The rate differential was very large. When I met chief minister Amarinder Singh before the budget, he asked me to align rates of petrol and diesel with neighbouring states. From midnight today, rates on petrol and diesel will come down. This will give a boost to the state's economy.""It is expected that the reduced prices of diesel in Punjab, which will make it cheapest in the region and result in more business over the year. Why should any state revenue of the other? Why should we be in a tax war?" said Manpreet.Later replying to a question, the state finance minister said the exact reduction in VAT would be calculated by the finance department. He added that the figure for VAT collection estimates for 2019-20 has been kept static as the previous year. "The loss due to VAT slash will be made up by higher sales of fuel. The VAT receipts for the next year have not been increased. This year, we are likely to get Rs 6,300 crore and we have maintained it (the estimates) at that. There is increase in consumption of roughly 10% each year which has not been included," he said.Asked why the reduced VAT doesn't reflect in the budget estimates, he said, "The year on year growth has not been included and VAT has been pegged at the same level." On why Punjab did not reduce VAT in October last when most of the other states did, Manpreet said, "For the past 15 years, Punjab's petrol trade was static. , and 25% fuel stations are in border areas. As a result, our petrol sales were affected. Today our financial indicators are better and I can take the risk to lower VAT."

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