After Gujarat, Maharashtra government has also slashed VAT (value-added tax) on retail fuel, cutting petrol prices by Rs 2 per litre and diesel prices by Re 1 per litre respectively, effective midnight tonight, agency news reports said. After the new rates come into effect, petrol will cost Rs 75.58 per litre and diesel will cost Rs 59.55 in the state. Earlier in the day, Gujarat reduced the value-added tax (VAT) on petrol and diesel by 4%, becoming the first state to announce a reduction in the VAT. The effective price of petrol in Gujarat will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre.
The decision to slash prices by both the states was taken after the Finance Ministry asked state chief ministers to cut retail VAT rate on petrol and diesel by as much as 5%, following an excise duty cut of Rs 2 per litre on both, last week. Following the slashing of the excise duty on petroleum products, Oil Minister Dharmendra Pradhan had urged state governments to cut VAT on these products by 5 percent for passing on more relief to consumers. As per various media reports, Madhya Pradesh is also considering to follow the suit by trimming VAT.
Finance Minister Arun Jaitley had said the Rs 2 per litre cut in excise duty on petrol and diesel was done to give relief from relentless increase in prices and leave more money in hands of consumers. “Now it is up to state governments if they are concerned with the issue (to cut sales tax or VAT),” he had said.
On October 5, Oil Minister Dharmendra Pradhan, then, asked states to follow the Centre’s footsteps in cutting taxes on petrol and diesel. The central government decision to cut the excise duty on petrol and diesel came as a relief to consumers from three-month long relentless price hike. “We have requested all the states (to cut VAT) and I and sure that all the states will revisit their tax structure. Consumer interest is top priority. Just like excise Duty has been cut by the Centre keeping consumer interest in mind, states would also follow suit,” he had said.
While Gujarat and Maharashtra have slashed petrol and diesel prices, the Bihar government wants the central government to lower the ‘base price’. On October 9, Bihar Chief Minister Nitish Kumar had said that his government will appeal to the Centre to lower the ‘base price’ of petrol and diesel which stands at Rs 55 a litre in the eastern Indian state. “While base price of petrol and diesel in Bihar stands at INR 55 a litre, the same is INR 51 a litre in Jharkhand. We will make a strong plea to the Union Petroleum Ministry to lower this base price,” Nitish Kumar said.