UP suspends entry tax on diesel

The government of Indian state Uttar Pradesh (UP) announced that it would suspend the entry tax on diesel fuel starting February 1. The tax had earlier led to a diesel fuel price hike of Rs1.59 (US$0.03) per liter across the state. Principal Secretary for Tax and Registration Desh Deepak Verma said, “As trade tax on diesel in the state was higher than the entry tax, there was a provision in the Trade Tax Act which provided adjustment of entry tax in the sales tax paid by the oil companies.” The 5% entry tax was imposed on all variants of diesel fuel, including high speed and low sulfur in 2004. To make the suspension more effective, the UP government would also revise the state’s Value Added Tax act, as it has no clear provision regarding entry tax adjustment. (February 2, 2009)