India May 23(IM): To provide some much-needed relief to customers, Maharashtra government has announced to slash Value Added Tax or VAT on fuel. The state government has reduced VAT on petrol by Rs 2.08 per litre and on diesel by Rs 1.44 per litre, effective immediately from Sunday. This decision would cost state exchequer an annual revenue loss of Rs 2,500 crore.
The move came after the central government had slashed the excise duties on petrol and diesel by Rs 8 and Rs 6 per litre on May 21. With the latest rate cut, the petrol and diesel prices dropped by Rs 9.5 litre and Rs 7 per litre respectively. Earlier in November, 2021 the Centre lowered the excise duty on petrol and diesel by Rs 5 per litre and Rs 10 per litre, respectively.
Following Centres decision, the Rajasthan government also brought down VAT on petrol by Rs 2.48 per litre and on diesel by Rs 1.16 per. Rajasthan chief minister Ashok Gehlot in a tweet said, Due to the reduction in 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 liter in the state.
The Odisha government has also reduced VAT on petrol and diesel by Rs 2.23 and Rs 1.36 a litre, respectively, according to a report by Moneycontrol.
On May 21, the Kerala government also announced a cut in petrol and diesel prices by Rs 2.41 a litre and Rs 1.36 a litre, respectively. The Union government has partially reduced the huge tax on petrol and diesel. Kerala government welcomes this decision, Kerala finance minister K N Balagopal said in a statement on Saturday.
The Karnataka chief minister Basavaraj Bommai said his government would consider a further cut in fuel tax. The Centres decision has come on Saturday night, lets see, we will consider it, Bommai said on Sunday.
Basic Excise Duty is Not Shareable with States FM
Explaining the decision, finance minister said that the excise duty cut has entirely been made in Road & Infrastructure Cess RIC. Basic ED which is shareable with states has not been touched. Therefore, the entire burden of these two duty cuts made in Nov, 21 and yesterday is borne by the Centre, she added.
âBasic Excise Duty BED, Special Additional Excise duty SAED,Road and Infrastructure Cess RIC and Agriculture and Infrastructure Development Cess AIDC together constitute Excise Duty on petrol and diesel. Basic ED is shareable with states. SAED,RIC and AIDC are non shareable, she said.
Finance minister Nirmala Sitharaman mentioned that this decision will have a revenue implication of Rs 1 lakh crore per year for the government.
The duty reduction made yesterday has an implication of Rs 1,00,000 cr a year for Centre. The duty reduction made in November21 has an implication of Rs 1,20,000 crore a year for Centre. Total revenue implication to Centre, on these two duty cuts is thus Rs 2,20,000 crore a year, she tweeted, finance minister tweeted.
source : News18