The Assembly passed a Bill making further amendments to the Tamil Nadu Value Added Tax Act, 2006, to modify the tax system on petrol and diesel. It replaces ordinances promulgated in May.
An abnormal swing in prices of petroleum products was expected in the future, amid the pandemic, and due to other cyclical factors, according to a statement of objects and reasons mentioned in the Bill moved by Minister for Commercial Taxes K.C. Veeramani.
To protect State finances, the government has decided to modify the existing system of taxation, with respect to petrol, with or without additives, from 34% to 15%, ad valorem tax plus specific tax of 13.02 a litre, and that of high-speed diesel oil from 25% to 11%, ad valorem tax plus specific tax of 9.62 a litre, it added.
The objective of the change in the VAT rate is to protect the State revenue due to fluctuating international prices. Basically, the government has moved away from a VAT levy on the basis of value of the product to a combination of value and on a fixed basis per litre. Accordingly, the rate is also recalibrated, B. Sriram, tax partner, EY India, said.
Will affect common man
DMK MLA J.L. Eswarappan (Arcot), on Wednesday opposed the VAT Amendment Bill in the introductory stage, saying that though the legislation looked harmless at first glance, the interpretations would affect the common man, especially during the pandemic. He said the hike in fuel prices would lead to a hike in vegetable prices and that it would have a cascading effect.
Surprised as to how India remained the only country in the world to hike fuel prices, even as crude oil prices fell, Mr. Eswarappan urged the AIADMK government to pass a resolution in the House against the Centre over fuel prices.
Commercial Taxes Minister K.C. Veeramani, however, defended the legislation, contending that it was only passed to ensure that the economy was not badly hit. After a voice vote, the Bill was passed in the House.