Petroleum dealers in Karnataka have sought a reduction of tax rate by Rs 2 a litre of diesel.

Mr Satish N. Kamath, Executive Committee Member of Dakshina Kannada and Udupi Districts' Petroleum Dealers' Association, told Business Line that a reduction in the tax rate to the extent of Rs 2 a litre of diesel will help equalise the diesel retail selling price (RSP) with the neighbouring states.

The Karnataka Budget for 2012-13 has proposed to reduce sales tax on diesel by 1.25 per cent. With this, the Government wants to bring down sales tax on diesel from 18 per cent to 16.75 per cent.

For this, Mr Kamath said this will translate to a reduction of just 48 paise a litre of diesel.

diversion of

Stating that this will not serve any purpose, he said diesel is cheaper by Rs 2 (on an average) in the neighbouring states such as Kerala, Andhra Pradesh and Tamil Nadu.

Due to the difference in the price of diesel, there is a huge diversion of diesel sale from Karnataka to neighbouring states. This is leading to a substantial revenue loss to Karnataka as well as to dealers in the border areas of the state, he said.

Though the Government might lose around Rs 2 crore a day if tax rate is reduced by Rs 2/l of diesel, the volume of diesel sales would go up leading to a gain of around Rs 7 crore a day.

With this, there will be a net gain only, he said.

The Petroleum Dealers' Association of Karnataka had told the Government that the additional volume of sales going to other states can be brought down, if the tax rate is reduced by Rs 2 a litre of diesel, he said.

To a query on the diversion diesel sales to other states, Mr Kamath said the locations bordering Tamil Nadu, Andhra Pradesh and Kerala are witnessing more diversions compared to the locations bordering Goa.

> vinayakaj@thehindu.co.in

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