Petrol and diesel prices in Kerala will fall from June 1 as the state government has decided to slash fuel price by Rs 1 a litre on Wednesday. The decision to cut tax on fuel has been taken in a cabinet decision. With this, Kerala has become the first to slash taxes on fuel prices after the recent rally.
In October last year, following the Narendra Modi government’s decision to cut excise duty on petrol and diesel by Rs 2 a litre, only four states announced a cut in retail Value Added Tax (VAT). Kerala levies 24.52% tax on diesel price and 31.8% on petrol price. The state also levies Re 1 as a cess on both petrol and diesel.
A report by the State Bank of India said that states can cut petrol price by Rs 2.65 per litre and diesel by Rs 2 a litre if they decide to forego potential additional gains out of high crude oil rates. It also suggested that to further rationalise fuel prices states can consider a pricing mechanism where VAT is imposed on base price only by states and not on prices inclusive of the Centre’s tax.
