PUDUCHERRY: Puducherry residents will usher in the New Year with increased fuel prices as the government has decided to enhance the Value Added Tax (VAT) on petrol and diesel from January 1, 2025. The revised rates, announced in an order issued by Lt. Governor K. Kailashnathan on Friday, reflect a VAT hike of approximately 2.44% for petrol and 2.57% for diesel across the Union Territory (UT).Petrol has been enhanced to 16.98% from 14.54% in Puducherry region , 16.99% from 14.55% in the Karaikal region, 15.79% from 13.32 % in Mahe region and 17.69% from 15.26% in Yanam region of the UT.The VAT on diesel has been enhanced to 11.22% in Puducherry, 11.23% in Karaikal, 9.52% in Mahe and 11.48% in Yanam from rates between 8.65% and 6.91% .The price increase is expected to translate to an additional Rs 2 per litre for both petrol and diesel in all regions of the UT. Despite the hike, officials emphasize that fuel prices in Puducherry will remain lower than in neighbouring states, including Tamil Nadu, Kerala, and Andhra Pradesh.Currently, petrol is priced at around Rs 94.26 per litre in Puducherry, Rs 94.03 in Karaikal, Rs 91.92 in Mahe, and Rs 94.92 in Yanam. Diesel prices stand at around Rs 84.48 in Puducherry, Rs 84.35 in Karaikal, Rs 81.90 in Mahe, and Rs 84.75 in Yanam.The decision aims to bolster VAT revenue, which has grown marginally over the past three years—from Rs 640 crore to Rs 740 crore. The government’s previously reduction in VAT by Rs 7 per litre for petrol in November 2021 after the central government slashed excise duty on fuel has impacted the revenue .Officials noted that the new rates are strategically set to maintain a competitive edge over neighboring states. For example, the price gap for petrol between Puducherry and Tamil Nadu towns like Cuddalore and Villupuram is around Rs 8 per litre, while the diesel price difference is nearly Rs 9.89 per litre. The marginal increase is expected to sustain consumer demand as fuel prices in the UT would remain attractive.This adjustment, while modest, is anticipated to boost revenue while ensuring Puducherry retains its position as a preferred fuel destination for residents and commuters from adjacent states.
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