Odd even scheme: SC ban on diesel vehicles hit AAP govt exchequer

The Supreme Court order banning registration of new diesel cars above 2,000cc in the National Capital Region for three months, clubbed the Aam Aadmi Party government's flagship odd even car rationing formula in January, have hit the government exchequer hard –to the tune of nearly Rs 100 crore.

Data obtained from the Delhi government show that the odd even scheme –implemented in the capital between January 1 and 15 to curb pollution has led to a loss of nearly Rs 40 crore, since the rule led to a significant drop in the sale of petrol and diesel within in the city. The department of trade and taxes earns a significant amount from the value added tax (VAT) on petrol and diesel.

Similarly, the apex court order has decreased VAT collection by nearly 20.13%, since the sale of expensive diesel cars above 2000 cc has gone down since January. According to senior officials, the amount sums up to anywhere between Rs 40 and Rs 50 crore.

For instance, AMP Motors Pvt Ltd, a car dealer selling Jaguar and land Rover, had paid a VAT of Rs 2.85crore in January this year, as against Rs 0.74 crore in February, after its sales dropped post the apex court order.

Similarly, Avia Auto Services Private Limited, another car dealer selling Renault cars, had paid taxes of Rs 1.37 crore in January, but just a nil amount last month, for the same reason.

Deutsche Motoren Private Limited, another automobile dealer selling BMW cars, has paid the Delhi government Rs 2.83 crore as taxes in January, which dropped to Rs 1.51 crore in February.

A few car dealers dna spoke to admitted that while people are still buying expensive petrol cars, sale of their diesel counterpart have dropped since January, which was the preferred choice among most buyers because of a cheaper diesel rate.

The losses are crucial, given that the AAP government has less than a month left to meet its revised Value Added Tax (VAT) target of Rs 21,000 crore, of which the government has collected Rs 18,300 crore so far. VAT contributes to nearly 70% of Delhi government's projected tax revenue. The rest is met from other taxes such as excise and luxury taxes.

According to sources, the green tax imposed on commercial vehicles entering Delhi has also caused an additional revenue loss in the VAT revenue of about Rs 30 crore, since many vehicles have stopped plying via Delhi post the decision in December last year. Earlier, such vehicles used to buy fuel from Delhi because of the capital's lower fuel rate as compared to its neighbouring states.

A senior official told dna that the government, at present, is not considering increasing the VAT on any goods. "To nullify the losses, we are focusing on preventing tax evasion by dealers and registering those who are not registered at present," the official said, adding that the measures, aimed at cleaning up Delhi's air, are meant for the larger good.