After govt instructions, BJP ruled Gujarat slashes 4% Value-Added Tax on petrol, diesel

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After Centre's appeal to States to reduce VAT on fuel, the Maharashtra government on Tuesday slashed the tax, bringing down petrol and diesel prices by Rs 2 and Rs 1 a litre respectively from midnight, according to news agency PTI.

The effective price of petrol in Gujarat from mid-night on Tuesday.

Last week, the central government had announced a 2 per cent cut in excise duty on petrol and diesel making these two essential fuels cheaper by Rs 2 per litre.

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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. The central government decision to cut the excise duty on petrol and diesel came as a relief to consumers from three-month long relentless price hike.

The state earns around Rs 12,000 crore per annum through Value-Added Tax.

The chief minister further said, "Penal action will be taken against sellers who sold non-certified pesticides".

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The central government last week, had announced cutting the excise duty on fuel to help lessen the customer burden at a time when the global prices are gradually going up. Kerala government has already rejected the proposal stating that the move will be unfavourable to the state as it significantly cuts down on the revenue.

70% of total final retail prices of petrol and diesel are accounted by tax charges. "We have proactively cut excise duty".

So states must also bear a part of the impact, he said, adding that the revenues of both the Centre and state governments would be impacted by duty cuts but an upward movement in the economy would give adequate space for covering up of the lost revenue.

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