(Image source from: The Financial Express)
Maharashtra Cuts VAT On Petrol, Diesel Prices:- The Maharashtra cabinet, after Gujarat, on Tuesday has decided to slash Value Added Tax (VAT), thereby reducing the prices of petrol and diesel by Rs 2 per litre and Re 1 per litre respectively. The reduced prices will come into effect from midnight.
The new development comes as a huge relief for the people in the state with petrol prices hovering close to Rs 80 per litre. This decision by the Devendra-Fadnavis led Maharashtra government, comes days after Petroleum Minister, Dharmendra Pradhan urged states to reduce VAT on fuel to bring down prices. Pradhan had said, the States must also give further relief by reducing VAT by 5 per cent, while Centre had provided some relief to consumers by reducing excise duty on petrol and diesel by Rs 2 per litre.
Earlier today, the Gujarat government also announced reduction in VAT on fuel by 4%, thus bringing down the petrol prices to Rs 2.93 per litre and diesel by Rs 2.72 per litre.
The states, levy VAT as an ad valorem duty, unlike the centre, which increases every time, whenever there is an increase in price. The excise duty had been cut by the Centre to Rs 2 per litre and to provide further relief to consumers, it wanted states to cut sales tax or VAT on petrol and diesel by 5 per cent.
Pradhan had said, around Rs 26,000 crore in revenue in the cut in excise duty, had been sacrificed by the Centre. “States are the biggest beneficiary. They get all of the VAT collection plus they also get 42 per cent of the central excise collections. The amount remaining with the Centre is used to finance centrally sponsored schemes in states,” he had said.
This move of the Centre and state government’s come in the wake of criticism by consumers over the dynamic pricing of petrol and diesel. In the past two months, the prices had seen a constant rise. Last month, the petrol price in Delhi had crossed Rs 70 per litre, while in Mumbai, it was just below Rs 80 per litre.