Maharashtra, Gujarat & Himachal cut Value-Added Tax on fuel

Maharashtra, Gujarat & Himachal cut Value-Added Tax on fuel

In Maharashtra, petrol and diesel prices are trading near Rs 80 per litre and Rs 61 per litre by end of September 2017- which is at three year high.

On Tuesday, petrol cost Rs 77.58 per litre in Mumbai while the price of diesel was Rs 60.55. After the new rates come into effect, petrol will cost Rs 75.58 per litre and diesel will cost Rs 59.55 in the state. Also elections are nearing in both Gujarat and Himachal Pradesh.

The Uttarakhand government has chose to reduce the value added tax (VAT) on petrol and diesel by 2%, state Finance Minister Prakash Pant said on Wednesday. The move comes at a time the petrol and diesel prices at peak for which Finance Minister Arun Jaitley had asked all states to consider reducing state-level taxes on petrol and diesel products.

The Gujarat government has cut the Value-Added Tax by 4 percent, state Chief Minister Vijay Rupani said on Tuesday. This effectively means that Indian consumers are paying nearly the same for petrol and diesel when crude was at Dollars 110/barrel. Facing heat from the Opposition over rising retail fuel prices, the Central government had on October 4 cut the basic excise duty on petrol and diesel by Rs 2 per litre. He added that motor spirits accounted for around 20 to 22% of the VAT collection with Rs 18,353.49 crore of the 90,985 crore VAT collections in 2016-17 coming from VAT on petrol and diesel.

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Announcing the rate cut as a "Diwali gift to the masses", the Maharashtra government expressed hope that the benefit would be passed on to consumers by oil companies.

"The decision would put a burden of Rs 2,316 crore a year on the state exchequer".

Mungantiwar admitted that Tuesday's decision would lead to a revenue loss of Rs 2,015 crore.

The VAT on petrol and diesel would be cut by 1 per cent to give relief to people, said chief minister Virbhadra Singh who presided over the cabinet meeting. Currently, the state has imposed a Value-Added Tax of 27 percent on petrol and 16 percent on diesel. The state government has been criticised in the past for having the highest taxes on petroleum products in the country. Given the huge difference between the maximum GST rates and current taxation rate on petrol and diesel, the government would require a cess of almost 50-75 percent to make up for lost revenue.

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