Ahmedabad: In what can term as a relief for the consumers, the Gujarat government has announced of reducing VAT on fuel by 4 percent. With this announcement, petrol prices are likely to come down by Rs 2.93 and diesel by Rs 2.72.
The new prices will kick in from the midnight of Tuesday and Wednesday.
“We are cutting down VAT on fuel by 4%; the price of petrol to come down by Rs 2.93, diesel by Rs 2.72,” said Gujarat CM Vijay Rupani.
On Wednesday, Rupani had announced the state’s resolve to cut VAT rates. Gujarat levies 28.96 percent VAT on petrol and diesel.
Gujarat becomes the first state to cut VAT on fuel prices after Dharmendra Pradhan, Petroleum minister had written to chief ministers of all the states, requesting them to cut taxes.
Pradhan said the Centre has sacrificed Rs 26,000 crore in revenue in the cut in excise duty. “States are the biggest beneficiary. They get all of the VAT collection plus they also get 42 per cent of the central excise collections. The amount remaining with the Centre is used to finance centrally sponsored schemes in states,” he said.
However, Kerala government has turned down the centre’s request and said that responsibility lies with New Delhi to reduce the rates.
State levy or VAT on fuel is a major component as far as the overall fuel prices are concerned.
Ever since the implementation of Goods and Services Tax, several states have increased the value-added tax, leading fuel prices to rise significantly. Currently, VAT varies from 9 to 25 percent across states.
Petrol and diesel prices fell sharply on Wednesday after reduction in excise duty. The move gave relief to thousands of consumers who were feeling the brunt of the daily revision of prices.
The government on Tuesday cut excise duty on petrol and diesel by Rs 2 per litre to moderate the relentless rise in fuel prices witnessed for the last three months.
The government in June junked 15-year practice of fortnightly revision in rates and moved to daily changes in petrol and diesel in line with international oil movements.