Cash Strapped Andhra Pradesh had suffered income loss from the sale of Diesel. The state has a VAT of Four Rupees on every liter of Petrol and Diesel. Petrol Dealers and Cabinet Sub-committee recommended government to remove this VAT or else the neighbouring states will get benefited. But some officials did not pay heed to the advice.
Lorries and other vehicles owners in the borders of the state are sneaking in to other states to fill their tanks due to this extra VAT. As a result, the sale of diesel fell drastically in AP. Telangana, Tamil Nadu, Odisha and Karnataka got benefited from this. AP got 1224 Crore from VAT on diesel sale but it is not on par with the growing number of vehicles.
AP and Telangana levy 9 Rupees Sales Tax on every liter of Petrol and Diesel. AP is additionally levying 4 Rupees VAT on this while Telangana is levying just 2 Rupees. On the other side, Karnataka, Odisha and Tamil Nadu has no concept of VAT. So neighbouring states are benefiting from the mindless decision in AP.