Sunday, May 22 2005 13:48 Hrs (IST) - World Time -

New Delhi: Petroleum products may attract VAT from next fiscal as is implicitly recommended by mid-term appraisal of the Tenth Five Year Plan, Empowered Committee Secretary Ramesh Chandra said today (May 22, 2005).

"We are not averse to imposing VAT on petroleum products, but we are for gradual expansion of VAT list. As they say, we hasten but slowly," Ramesh Chandra, told sources in New Delhi.

At present, petrol and diesel are out of VAT, while LPG attracts VAT at 12.5 per cent.

MTA, approved by the Cabinet on May 19, pointed out that many goods have been kept out of VAT, including petroleum products, which are basic to manufacturing and transport.

The report will now be put before the National Development Council for approval. The meeting of NDC is likely to be held next month.

Explaining the rationale of keeping petroleum products out of VAT, the white paper released by Finance Minister P Chidambaram said that prices of these products are not fully market-determined.

However, the Delhi Government had imposed VAT on diesel in this year's budget and increased the rate to 20 per cent from 12.5 per cent.

While imposition of VAT on diesel was against Empowered Committee's mandate, increase of rate to 20 per cent was in line with VAT panel's view on minimum rate of sales tax on the fuel.