Press Statement by Honourable Minister for Taxation, Dr. Vanlalthlana, on 3rd September 2024 at 1:00 PM at his Office Chamber, MINECO

Aizawl : Today at 1:00 PM, Taxation Minister Dr. Vanlalthlana held a press conference in his office chamber at MINECO to address the issue of Value Added Tax (VAT) on petrol and diesel. The press conference was attended by Mr. S.M. Ali, Secretary of the Taxation Department, Mr. R. Zosiamliana, Commissioner of State Tax, and other officials.

In his press statement, the Taxation Minister made the following points:

PRESS STATEMENT OF DR. VANLALTHLANA: 3.9.2024
VAT ON PETROL AND DIESEL

As of today, 3rd September 2024, I want to communicate my understanding of the concerns and requests from the people of Mizoram regarding the increase in VAT on petrol and diesel.

The increase in VAT on petrol and diesel is a difficult but necessary decision that has been carefully considered. We understand the challenges and hardships that this may cause for the public, and it has been a topic of intense deliberation for a long time. The concern over rising prices and inflation is at the forefront of our thoughts, and I assure you that this decision was not made lightly. As your Minister, I recognize the anxiety that such decisions may cause, and I am committed to ensuring that the reasons behind these decisions are communicated transparently.

Earlier this year, on 17th February 2024, the Mizoram Resource Mobilisation Committee recommended an increase in the prices of petrol and diesel, as well as a reversion to the VAT rates that were in place before the reduction in November 2021 (25% for petrol and 14.55% for diesel). This recommendation was accepted by the Taxation Department after careful consideration. The increase in prices and the need for state revenue in line with the actions of other states justified this move.

To help the public better understand this VAT increase on petrol and diesel, we also considered introducing a Road Infrastructure Cess and Social Infrastructure Service Cess. On 2nd July 2024, the Council of Ministers approved the VAT increase on petrol and diesel, and relevant rules have been updated accordingly.

Although the concept of a cess on petrol and diesel is new for Mizoram, it has been implemented in other states under different names (Cess on POL, Road Infrastructure Cess, Air Ambience Cess, etc.). Mizoram has now amended its VAT Rules for the first time to accommodate this change.

The Road Infrastructure Cess, levied under the Road Fund Act of 2007, is intended to fund road construction and maintenance. The proceeds will be used exclusively for road infrastructure, with strict accountability measures in place for all involved, including workers, officers, and ministers. We plan to collect Rs. 2 per liter from this cess to support road construction and repair efforts, especially in remote areas.

The Social Infrastructure Services Cess will fund educational infrastructure, healthcare, skill development, and women’s empowerment initiatives. We believe this measure will help alleviate many of the challenges we face in Mizoram.

Given the limited tax base in Mizoram, I ask for your understanding and support in this decision to introduce these new cesses as a more effective and fair way to generate revenue than merely raising VAT rates. While fuel prices have risen, they remain below the levels seen in 2021. For context, the VAT reduction of Rs. 7 per liter in November 2021 brought petrol prices down from Rs. 107.12 to Rs. 101.30 and diesel prices from Rs. 97.89 to Rs. 86.37.

Although petrol prices have increased to Rs. 99.24 per liter and diesel to Rs. 88.02 per liter today, these remain lower than the prices before the VAT reduction in 2021. The primary reason for this is the reduced rate of crude oil prices in India compared to 2021.

As your Minister, I take full responsibility for this decision. The Resource Mobilisation Committee’s recommendations were thoroughly reviewed to ensure that they serve the best interests of the people of Mizoram. I ask for your understanding and support as we work together to implement these measures.

In conclusion, while we aim to reduce fuel prices further, the introduction of these cesses is necessary to fund essential services and infrastructure projects. I assure you that we are committed to minimizing the impact on the people of Mizoram and especially on our hardworking citizens. I urge you to continue supporting our efforts as we move forward.