VAT on petrol, diesel goes down in Maharashtra, Kerala, 6 other states; details here

The central government announced a reduction in the excise duty on petrol and diesel by Rs 8 per litre and Rs 6 per litre, respectively, on Saturday. According to Finance Minister Nirmala Sitharaman, this will lead to a reduction in the price of petrol by Rs 9.5 per litre and of diesel by Rs 7 per litre.  

The Finance Minister tweeted, “I wish to exhort all state governments, especially the states where the reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man.” She added that the government will provide a subsidy of Rs 200 per gas cylinder (upto 12 cylinders) to over 9 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana.  

Prime Minister Narendra Modi and Oil minister Hardeep Singh Puri welcomed the announcement. PM Modi wrote, “It is always people first for us! Today’s decisions, especially the one relating to a significant drop in petrol and diesel prices will positively impact various sectors, provide relief to our citizens and further ‘ease of living’.” 

Soon after this announcement, Congress leader P Chidambaram wondered whether the states can afford to give up revenue from the value added tax (VAT) on petrol and diesel. He tweeted, “The notification on reduction of duty on petrol and diesel is now available. FM used the words ‘excise duty’, but the reduction is in additional excise duty which is not shared with the states.” 

Puri said, “I want to highlight the fact despite this second reduction in central excise, price of petrol and diesel in states like Maharashtra, Rajasthan, West Bengal, Tamil Nadu, Andhra Pradesh, Jharkhand and Kerala remain around Rs 10-15 higher than in BJP-ruled states.”  

He added, “This (high prices in non-BJP ruled states) is due to their refusal of their respective state governments to reduce VAT. It is time for these states to wake up and reduce VAT to provide relief to their consumers.” 

States that have announced a reduction in VAT on petrol and diesel  

Maharashtra 

Day after the central government announced a cut in fuel price, the state government slashed the VAT on petrol and diesel. VAT on petrol has been slashed by Rs 2.08 per litre while VAT on diesel has gone down by Rs 1.44 per litre. As per news agency PTI, the state government will bear an annual loss of Rs 2,500 crore as a result.  

Maharashtra CM Uddhav Thackeray said, “The central government had hiked excise duty on petrol by Rs 18.42 per litre two months ago and today it has reduced it by Rs 8. Excise duty on diesel was also increased by Rs 18.24 and has now been reduced by Rs 6.”  

He added, “It is not right to increase prices at exorbitant rate first and then reduce rates nominally.”  

Leader of opposition in the state assembly Devendra Fadnavis hailed the Central government’s decision and tweeted, “Thank you Honorable PM Narendra Modi ji and Union FM Nirmala Sitharaman ji for reducing central excise duty by Rs 8/litre on petrol and Rs 6.litre on diesel. Union government to share Rs 1 lakh crore burden every year.”

In Mumbai, a litre of petrol currently costs Rs 111.35 whereas a litre of diesel costs Rs 97.28.  

Rajasthan  

Rajasthan Chief Minister Ashok Gehlot said that the government has reduced the VAT on petrol by Rs 2.48 per litre and on diesel by Rs 1.16 per litre after the reduction of excise duty by the Centre.  

Gehlot tweeted, “Due to the reduction I the prices of petrol and diesel by the central government, the state government will reduce VAT by Rs 2.48 per litre on petrol and Rs 1.16 per litre on diesel. With this, petrol will be cheaper by RS 10.48 and diesel by Rs 7.16 per litre in the state.” 

In Sri Gangangar district, a litre of petrol sells for Rs 113.49 and a litre of diesel costs Rs 98.24.  

Kerala 

The Left Democratic Front (LDF) government announced a cut in tax on the prices of petrol and diesel by Rs 2.41/litre and Rs 1.36/litre respectively. State Finance Minister KN Balagopal said, “Kerala government announces cut in tax on petrol and diesel by Rs 2.41 and Rs 1.36 respectively.” After the recent revision, a litre of petrol sells for Rs 107.71 whereas diesel costs Rs 96.52 per litre in Thiruvananthapuram.  

Tamil Nadu 

The DMK-led state government said that it is neither fair not reasonable to expect that states should reduce taxes on petrol and diesel. Finance Minister Palanivel Thiaga Rajan said the central government never consulted states when it increased taxes and Tamil Nadu was bearing a loss of ~Rs 1,000 crore due to the earlier tax cut announced by the Centre in November 2021.  

He tweeted, “The Union Government didn’t INFORM, let alone ASK for ANY state’s view when they INCREASED union taxes on petrol ~Rs 23/litre (+250%) and diesel ~Rs 29/litre (+900%) from 2014. Now, after rolling back ~50% of their INCREASES, they’re EXHORTING states to cut. Is this federalism?” 

A litre of petrol costs Rs 102.63 per litre whereas diesel sells for Rs 94.24 per litre in Chennai currently.  

Madhya Pradesh 

After the Central government’s decision to reduce fuel rates, the petrol and diesel rates in Bhopal came down to Rs 108.65 per litre and Rs 93.90 per litre respectively on Monday. Congress leader Kamal Nath demanded that the BJP government reduces VAT on petroleum products to further bring down the rates.  

Karnataka 

Basavaraj Bommai-led Karnataka government can consider a further cut in fuel taxes. Bommai said, “The decision (Centre’s) has come on Saturday night, let’s see, we will consider it.” A litre of petrol costs Rs 101.94 per litre while diesel sells for Rs 87.89 per litre in the state.  

Goa 

A source in Goa government said the BJP-led government will not reduce the VAT on petrol and diesel as this “might hurt the economy.” Goa levies 26 per cent VAT on petrol and 22 per cent on diesel. A litre of petrol costs Rs 97.68 while a litre of diesel sells for Rs 90.23 currently.  

West Bengal 

Trinamool Congress has said the state government will cut taxes once it lifts “economic blockade” and releases the funds due to the state amounting to Rs 97,000 crore. In Kolkata, a litre of petrol sells for Rs 106.03 whereas a litre of diesel costs Rs 92.76.  

(With agency inputs)