Petrol and Diesel costs more in Andhra Pradesh than in Telangana which is prompting the truncated state to lose VAT income to the neighbouring Telugu State where fuel prices are cheaper. The RTC buses plying between AP and Hyderabad and the vehicles in the border districts of both the states are filling their tanks in Telangana where the fuel is cheaper.
Considering all this, Andhra Pradesh is mulling a marginal reduction in Value Added Tax (VAT), by 4 percent, on both petrol and diesel. Telangana is keenly observing the developments and is likely to drop VAT if AP prices goes down compared to that in the new state.
“Our VAT policy is not depending on other states. But we will consider tax rates of other states and decide on a correction in order to prevent trade diversion in border areas”, opined a commercial tax officer in Telangana.
