Jayalalithaa removes 4% VAT on LPG in Tamil Nadu

CHENNAI: The Tamil Nadu government on Tuesday decided to drop the 4% value added tax on LPG to provide relief to domestic consumers in the backdrop of the Centre's decision last week to hike petroleum and cooking gas prices. The decision will be effective July 1.

Chief Minister J Jayalalithaa said in a statement that the total waiver of VAT on LPG would cost the exchequer 120 crore per year. Jayalalithaa had earlier demanded a rollback of the Centre's decision, terming it "unacceptable", and stated that the hike in petro product prices would lead to a cascading effect on the prices of essential items, and affect all sections of people.

She had also stated that the Centre had no moral right to advice state governments to reduce VAT to shield common people from the price rise caused by the Centre's decision to raise prices of petroleum products and cooking gas.

The 4% VAT waiver will reduce the price of LPG by 14.73 per cylinder to 389.67. The chief minister said she has decided to give this relief despite the state's finances being under immense stress. She said the previous DMK government had left an outstanding public debt of 1 lakh crore, and that most of the public sector units including TNEB, transport corporations and the milk federation were running at losses. Tamil Nadu's decision to remove the 4% VAT on LPG follows Kerala's decision to forgo additional sales tax on diesel.