Petrol, diesel prices fall in Gujarat, Maharashtra, Himachal Pradesh after states reduce VAT

As anger against high taxes on petrol and diesel boiled over, BJP-ruled states have taken lead in cutting value added tax (VAT) on the fuels. While BJP-ruled Gujarat and Maharashtra took the lead in lowering the tax, Congress-ruled Himachal Pradesh followed them. Though political parties are claiming the cut to be Diwali gift, it is to be remembered that there was huge public resentment over high taxes on these fuels. Also elections are nearing in both Gujarat and Himachal Pradesh.

Under public pressure, the Centre had recently brought down excise duty on petrol and diesel by Rs 2 per litre and urged the state governments to reduce the VAT to lower the fuel prices further.

The Gujarat government has cut the VAT by 4 percent, state Chief Minister Vijay Rupani said on Tuesday.

The reduction in tax comes just before Diwali in the state, where the Assembly polls are due around the year-end.

"After the central government's instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 percent from today midnight," Rupani said.

With this rate cut, the price of petrol will come down by Rs 2.93 and that of diesel by Rs 2.72 in the state.

The effective price of petrol in Gujarat from midnight Tuesday will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre.

Because of this move, the state government will suffer a loss of Rs 2,316 crore annually.

Representational image. Reuters

Representational image. Reuters

"But we have taken this decision in the interest of people," Rupani said.

Shortly after Gujarat, Maharashtra too announced a reduction in VAT on these fuels. Chief Minister Devendra Fadnavis the reduction in the VAT on petrol by Rs 2 and that on diesel by Re 1 a litre. Both the fuels have become cheaper by similar extent in the state.

State finance minister Sudhir Mungantiwar termed the cut as a "Diwali gift" to people of the state.

"The chief minister has approved a proposal to reduce the VAT on petrol and diesel by Rs 2 and Re 1 a litre, respectively. This is our Diwali gift to the masses," Mungantiwar told PTI.

He said the decision will cause an annual revenue loss of Rs 2,000 crore to the state exchequer.

"The government is ready to bear the additional financial burden despite Maharashtra's economy not being in a good shape," he said.

Late in the evening, the Himachal government also decided to reduce VAT on petrol and diesel by 1 percent.

The VAT on petrol and diesel would be cut by 1 per cent to give relief to people, said chief minister Virbhadra Singh who presided over the cabinet meeting.

"Cabinet has decided to lower the VAT by one percent on petrol and diesel in the state. Currently, the state has imposed a VAT of 27 percent on petrol and 16 percent on diesel. There will be a big relief to the people from rising petrol and diesel prices,” a spokesperson of the state government has been quoted as saying in a report in The Indian Express.

According to the report, the new rates are Rs 68.32 per litre ( down from from Rs 69.01) for petrol and Rs 56.32 (Rs 57.09) for diesel.

(With inputs from PTI)

Updated Date: Oct 11, 2017 07:55 AM

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