Gujarat, U?khand cut tax on oil; AP relief on LPG

Three more states went in for duty cuts on fuel on Tuesday, in a bid to moderate the oil price hike announced last week. While Andhra Pradesh decided to absorb the price increase on LPG cylinders, Gujarat and Uttarkhand have cut the tax on petrol and diesel.

The Andhra Pradesh Government has issued an order providing for supply of cooking gas to all consumers at the old rate of about Rs 300. The Congress led state government has told oil companies that it would absorb the Rs 50-hike in the price of each LPG cylinder.

The government however ruled out any reduction in the Vat rate on petroleum products, citing financial constraints. At present, Andhra levies a 33% VAT on petrol, the highest in the country, and 22.25% on diesel, the second highest after Gujarat.

Meanwhile, the BJP led Gujarat government on Tuesday also came out with relief measures and reduced the Vat on petrol and diesel by 3%.

It has also cut the Vat on LPG by 4%. Gujarat levies Vat at the rate of 29.88% on petrol and at 29.13% on diesel.

The Uttarakhand government too slashed the prices of the two fuels and cooking gas following a meeting of the state Cabinet. While petrol and diesel will now be cheaper by 50 paise, LPG cylinders will be less expensive by Rs 12.48 in the state. After the prices of petroleum products were hiked last week, petrol costs Rs 51.86 per litre, diesel Rs 37.02 per litre and gas Rs 345.17 per cylinder in Uttarakhand.

The Himachal Pradesh government on Tuesday ruled out any such duty cuts as it already levies sales tax at a very low rate.

Following the UPA government?s decision last Wednesday to increase prices of fuel, states have been announcing fiscal measures to provide some relief to end-users. While West Bengal, Delhi and Kerala were amongst the first to announce such measures, others including Goa, Haryana, Tamil Nadu, Uttar Pradesh and Bihar also followed suit soon after.

In fact the empowered committee of state finance ministers is now scheduled to meet on June 16 to discuss further fiscal steps, in the form of duty cuts, to offset the fuel price hike.