Gandhinagar/ Mumbai, Oct 10 - The Gujarat and Maharashtra government on October 10 announced a 4% cut in Value Added Tax (VAT) on petrol and diesel, effective from midnight, to bring down fuel prices in the two states.
Gujarat chief minister Vijay Rupani said: “With the reduction in VAT, petrol price will be reduced by Rs 2.93 a litre and that of diesel by Rs 2.72 a litre."
The reduction comes after the state government cut prices of auto fuel by 60 paise soon after the Centre's decision to reduce basic excise duty by Rs 2 per litre from October 4.
In Maharashtra, the net reduction in petrol and diesel prices will be around Rs 2.33 per litre and Rs 1.25 per litre, respectively, though the various cess levied by the state have not been reduced, said All India Petrol Dealers Association spokesperson Ali Daruwala.
Mumbai Petroleum Dealers Association President Ravi Shinde said the current VAT in the state is around 26% on petrol and 21% on diesel, plus different cess totalling Rs 9 per litre. This leads to a hike in the prices of petrol and diesel by nearly 50% for every litre in the state
Gujarat CM said the slashing of VAT would put a burden of Rs 2,316 crore a year on the state exchequer. Gujarat annually earns Rs 12,000 crore by way of VAT on auto fuels.
With the reduction in VAT, the Maharashtra government is likely to suffer a loss of around Rs 2,500 crore.