In order to provide some much-needed relief to the customers, the Maharashtra government has announced the reduction of Value Added Tax or VAT on fuel. The state government has reduced VAT on petrol Rs 2.08 per liter with immediate effect from Sunday and Rs 1.44 per liter on diesel. The decision will result in loss of revenue of Rs 2,500 crore annually to the state exchequer.
This step has been taken after the central government cut it Excise duty on petrol and diesel On May 21, at the rate of Rs.8 and Rs.6 per liter. With the latest rate cut, Petrol and Diesel Prices There has been a drop of Rs 9.5 and Rs 7 per liter respectively. Earlier in November 2021, the Center had reduced the excise duty on petrol and diesel by Rs 5 per liter and Rs 10 per liter respectively.
Following the Centre’s decision, the Rajasthan government reduced VAT on petrol by Rs 2.48 per liter and on diesel by Rs 1.16 per liter. Rajasthan Chief Minister Ashok Gehlot said in a tweet, “Due to the reduction in the prices of petrol and diesel by the central government, the state government will reduce VAT on petrol by Rs 2.48 per liter and on diesel by Rs 1.16 per liter. This will make petrol cheaper by Rs 10.48 and diesel by Rs 7.16 per liter in the state.
According to a Moneycontrol report, the Odisha government has also reduced VAT on petrol and diesel by Rs 2.23 and Rs 1.36 per liter respectively.
On May 21, the Kerala government also announced a reduction in petrol and diesel prices by Rs 2.41 per liter and Rs 1.36 per liter respectively. “The central government has partially reduced the heavy tax on petrol and diesel. The Kerala government welcomes this decision,” Kerala Finance Minister KN Balagopal said in a statement on Saturday.
Karnataka Chief Minister Basavaraj Bommai said his government would consider further cuts in fuel tax. “The Centre’s decision has come on Saturday night, let’s see, we will consider it,” Bommai said on Sunday.
Basic excise duty not shareable with states: FM
Explaining the decision, the Finance Minister said that the Road and Infrastructure Cess (RIC) has been cut completely in the excise duty. “The original ED which is shareable with the states has not been touched. Hence, the entire burden of these two fee cuts (done in November 21 and yesterday) is borne by the Centre,” she said.
“Basic Excise Duty (BED), Special Additional Excise Duty (SAED), Road and Infrastructure Cess (RIC) and Agriculture and Infrastructure Development Cess (AIDC) together constitute the excise duty on petrol and diesel. Basic ED of the States Shareable with. SAED, RIC and AIDC are non-shareable,” she said.
Finance Minister Nirmala Sitharaman said that this decision will affect the government’s revenue of one lakh crore rupees annually.
“The fee reduction done yesterday has an implication of Rs 1,00,000 crore per year for the Centre. The fee cut done in November’21 has implications of Rs 1,20,000 crore per annum for the Centre. The total revenue implication to the Centre, on these two fee cuts is Rs 2,20,000 crore annually,” he tweeted.
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