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The BJP-led Gujarat government on Tuesday announced 4-per cent cut in the Value-added Tax (VAT) on the retail price of petrol and diesel responding to the Centre's suggestion amid escalating fuel cost.
Effective midnight, the VAT reduction will bring down the price of petrol by Rs 2.93 per litre and that of diesel by Rs 2.72 per litre. The move will cost the state exchequer Rs 2,316 crore annually. The state currently, levies 28.96 per cent VAT on petrol and diesel.
"The decision has been taken in the interest of the people and it should not be linked with the polls," Gujarat Chief Minister Vijay Rupani told media persons while announcing the decision. Earlier on October 4, the Centre had reduced the basic excise duty on the auto fuel by Rs 2 per litre to placate the public anger over escalating prices.
According to the Chief Minister, Gujarat annually earns Rs 12,000 crore from VAT on auto fuels.
After the tax cut, new rates on petrol and diesel applicable from midnight in Gujarat will be Rs 67.53 per litre and Rs 60.77 per litre, respectively.
Among other states, Maharashtra announced tax reduction from midnight, while Madhya Pradesh is still discussing the possibility and a decision likely post Diwali.
Earlier Union petroleum minister Dharmendra Pradhan had requested the states to take responsibility in the "consumer interest".
However, states like Kerala and Odisha have objected to the suggestion terming it 'unfavourable' to implement.
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