The Hindu Business Line : Maharashtra cuts sales tax on diesel

Some relief
The State Cabinet took the decision after petrol dealers went on a strike.
The State exchequer will still lose about Rs 400 to 450 crore in next one year as sales tax revenue.

Mumbai , Nov. 24

From December 1, diesel would be cheaper by about Rs 3 per litre in Maharashtra. In Mumbai, Navi Mumbai and Thane the price would be Rs 36.67 per litre and in the rest of the State it would be Rs 35.88. Petrol prices will remain unchanged.

Currently, diesel costs Rs 39.10 in Mumbai, Navi Mumbai and Thane and Rs 38.32 in rest of Maharashtra.

The reduction in prices follows the Maharashtra Government's decision on Friday to reduce sales tax by five percentage points and scrapping the Rs 1 surcharge on diesel.

State's assurance

The State Cabinet took the decision after petrol dealers went on a strike from Monday, which was called off on Wednesday, following the State Government's assurance on cut in sales tax.

Currently, the sales tax is 33 per cent plus Re 1 surcharge per litre of diesel in Mumbai, Navi Mumbai and Thane, which would be reduced to 28 per cent. Rest of Maharashtra it is 30 per cent plus Re 1 surcharge, which would become 25 per cent, from December 1.

Talking to Business Line, Mr Subodh Kumar, Principal Secretary (Finance), Maharashtra Government, said that after the five per cent cut in sales tax and considering the consequential rise in diesel sales, the State exchequer will still lose about Rs 400 to 450 crore in next one year as sales tax revenue.

In the current fiscal — next four months — the revenue loss would about be Rs 150 crore, he said.

Mr Kumar said that in 1998 the sales tax on diesel was 21 to 23 per cent, which climbed to 36 per cent in 2002 and further increase to 39 per cent in the same year. Due to increase in tax and fluctuations in prices, the diesel sales volume fell to 2,945 million litres in 2005-06 from 3,611 million litres in 1998-99, he said.

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