Petrol, diesel to be cheaper in Maharashtra after 4% VAT cut

Net reduction in petrol and diesel prices will be around Rs 2.33 per litre and Rs 1.25 per litre respectively from Tuesday midnight

Petrol and diesel products will become cheaper in Maharashtra from midnight on Tuesday due to four per cent reduction in Value Added Tax (VAT), an official said in Mumbai.

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.

The move follows a communication from Union Finance Minister Arun Jaitley to all state governments to consider reducing state-level taxes on petrol and diesel products, which increase prices at local levels.

Mumbai Petroleum Dealers Association President Ravi Shinde said the current VAT in the state is around 26 per cent on petrol and 21 per cent 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 per cent for every litre in the state.

"Our demand for reduction in cess on petrol and diesel products by the state government was rejected and we were informed that it is utilised to repay farm loans waiver package announced in June," Daruwala told IANS.

With the reduction in VAT, the Maharashtra government is likely to suffer a loss of around Rs 2,500 crore.

Maharashtra may cut VAT on petrol, diesel, suffer Rs 2,600 cr revenue loss

BJP-ruled Maharashtra levies 46.52 per cent VAT (47.64 per cent in Mumbai) on petrol, the highest in the country

After Gujarat, the Maharashtra government may opt for a Rs 2 per litre cut in value-added tax (VAT) on petrol and diesel, adding to the losses of the debt-ridden state.

BJP-ruled Maharashtra levies 46.52 per cent VAT (47.64 per cent in Mumbai) on petrol, the highest in the country. Moreover, a surcharge of Rs 11 per litre and Rs 2 per litre is already collected on petrol and diesel, besides the VAT.

After the implementation of the goods and services tax (GST), several states have increased the value-added tax, leading to a rise in fuel prices.

VAT cut impact on Maharashtra

The move will not only hit Maharashtra’s exchequer but also lead to a revenue loss of Rs 2,600 crore, reported Indian Express.

Farm loans: The cost of waiving farm loans will shoot Maharashtra’s debt stocks to Rs 4.13 lakh crore in FY17, the report added. Therefore, the cut will further aggravate the state’s burden to revive economy.

Gujarat becomes the first state to cut VAT

Gujarat, which currently levies 28.96 per cent VAT on petrol and diesel, became the first state to cut VAT.

ALSO READ: Gujarat first state to slash VAT on fuel prices

Most BJP-ruled are likely to follow Centre’s move, even though Devendra Fadnavis government had earlier rejected Centre’s suggestion for the same. Even Madhya Pradesh, which levies 38.79 per cent VAT on the fuel, indicated considering the option. However, non-BJP ruled states like Kerala and Odisha opposed against lowering of taxes.

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For the first time since Narendra Modi came to power in 2014, the NDA government cut excise duty on petrol and diesel by Rs 2 per litre to cushion the impact of rising international crude prices. The Centre took a hit of Rs 26,000 crore in revenue in the cut in excise duty….READ MORE