Maharashtra Follows Gujarat; Cuts Petrol, Diesel Rates By Up To

  • Maharashtra Follows Gujarat; Cuts Petrol, Diesel Rates By Up To

Maharashtra Follows Gujarat; Cuts Petrol, Diesel Rates By Up To

Bharatiya Janata Party (BJP)-ruled Gujarat reduced Value-Added Tax on petrol and diesel by 4%, becoming the first state to give relief to consumers from a recent surge in oil prices. Oil minister Dharmendra Pradhan too has been pitching for inclusion of petrol, diesel, jet fuel, natural gas and crude oil in the GST regime as it would ease the tax burden of oil and gas companies which at present are subjected to two streams of taxation, GST and VAT.

Petrol and diesel prices have dropped in the global market and the central government has chose to slash prices.

The central government cut excise duty on petrol and diesel by Rs2 last week, the first tax cut on fuel by the current government, to tame rising inflation. 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.

Slashing VAT would put a burden of Rs 2,316 crore a year on Gujarat's exchequer.

Due to price cuts, the government will lose out on INR 2,600 Cr revenue. Oil Minister Dharmendra Paradhan had thereafter, asked the state governments to cut Value-Added Tax on the fuel products by 5 per cent, saying that states are the biggest beneficiaries of the revenues generated from petrol and diesel.

On October 4, the Centre had reduced the basic excise duty on the auto fuel by ₹2/litre to placate an angry public over escalating prices.

On July 1, the prices of petrol and diesel in the national capital were Rs 63.09 and Rs 53.33 per litre respectively.

Excise duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre ever since Prime Minister Narendra Modi-led BJP government came to power in 2014. "The amount remaining with the Centre is used to finance centrally sponsored schemes in states", Pradhan said.

Justifying the move, he said there has to be a "uniform tax mechanism" all over the country.

An official of the GST Council, when contacted, said on condition of anonymity that a proposal to include petroleum products in GST has not been discussed at the Council as yet. Consumer interest is top priority.

The prudent thing to do is to reduce expenditure of the State government for which guidelines have been issued to all the departments.