The Punjab government on Monday announced its decision to abolish octroi on petrol and diesel in the state. This will lower prices of the fuel by up to Rs.2.
A state government spokesman said that the decision was taken in a meeting of the Punjab cabinet, headed by Chief Minister Parkash Singh Badal, here.
The abolition of octroi will reduce prices of petrol and diesel by Rs1-2 per litre, officials said here.
The spokesman said that the state government had already abolished octroi on all items except electricity, petrol and diesel with effect from Sep 1, 2006.
"However, the levy of octroi on petrol and diesel is adversely affecting the sale of these products in urban areas of the state, which are adjacent to other states, because the rate of these products in the neighbouring states is much less. Therefore there is a need to abolish octroi on petrol and diesel which is currently charged at the rate of 1 percent and 2 percent on diesel," he pointed out.
He said that amendments would be made to the Punjab Municipal Act to allow octroi abolition.
"The state government would compensate the local government department by enhancing the share of local bodies in the VAT from existing 10 per cent to 11 per cent which would offset the revenue loss following the abolition of octroi," the spokesman added.