Tax consession on purchase of petrol

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Petrol pump dealers sometimes receive tax concessions when purchasing fuel. This often occurs because state governments offer subsidies to petroleum companies, which are then passed on to retailers as a reduction in sales tax. This concession effectively acts as a discount on the purchase price and can typically be accounted for as such within accounting software like Tally.

Ashim kr Ray

Ashim kr Ray (Querist)
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25 August 2022 Sir

Petrol pump dealer at the time of purchasing petrol & diesel getting tax consession.
I want to know why this tax consession and what purpose.
and under what head in tally it will come.
Plz advise

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2022 Though it is advisable to get the clarification from the PRO of the petroleum company.
As far as I know, the companies fix standard rate of the petroleum products based on the maximum taxes (Excise +state ST +cess) for all over India. As ST is not same for all the states, so the states where the ST is lower, they reimburse it as tax concession in these states, bases on the ST rate of the particular state.
If that be the case, you can account it as discount against the purchase.

Ashim kr Ray

Ashim kr Ray (Querist)
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27 August 2022 Sir,
As per sales officer state govt offer subsidy to petroleum company and not to retailer. but
in retailer purchase bill tax consession is given and has effect on the bill.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 August 2022 Yes, the subsidy is in the form of reduction in Sales tax.
So, you can take the discount in purchase amount itself..

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