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12 October 2017, 01:00 | Darnell Patrick
There is no proposal at this juncture to reduce VAT on diesel and petrol in the state
The announcements come days after the Centre had asked all state governments to cut the Value Added Tax - an additional state levy - on fuel by 5%.
In a major relief for motorists and consumers, the state government on Tuesday chose to reduce the prices of petrol and diesel by Rs 2 and 1 per litre.
With this rate cut, the effective price of petrol in Gujarat from midnight of 10 October will be Rs66.53 a litre and that of diesel Rs60.77. The Centre had recently brought down the excise duty on petrol and diesel by Rs 2 per litre. For diesel, the Value-Added Tax is 24% plus a Rs 2 surcharge per litre in these seven cities, and 21% plus Rs 2 per litre surcharge in other areas."The surcharge on petrol has been reduced to Rs 9 per litre while that on diesel will be brought down to Rs 1", explained an official from the state finance department. Centre's revenues from petroleum products nearly doubled from ₹1,72,066 crore in 2014-15 to ₹3,34,534 crore in 2016-17, while it would part with 42% of the earnings with the State governments.
This decision has pushed Mumbai's fuel prices to a two month low. "You looted people over not just last three-and-a-half years but in the last 22 years by not cutting taxes". The VAT component varies across cities and the percentage is decided by individual state governments.
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Chief Minister Siddaramaiah on Wednesday ruled out slashing sales tax on petrol and diesel.
Despite the advent of the Goods and Services Tax (GST) regime, products such as motor spirits, aviation turbine fuel (ATF) crude, natural gas and liquor continue to attract VAT. This will put a burden of about Rs 2,000 crore on the state exchequer. "There will be a big relief to the people from rising petrol and diesel prices", a spokesperson of the state government has been quoted as saying in a report in The Indian Express. The State earns around Rs 12,000 crore per annum throughVAT.Becauseofthe reduction in VAT, the State Government now stands to lose out Rs 2,316 cror e annually.
In 2016-17, Maharashtra consumed 426.80 crore litres of petrol and 976.46 crore litres of diesel.
According to the report, the new rates are Rs 68.32 per litre ( down from from Rs 69.01) for petrol and Rs 56.32 (Rs 57.09) for diesel.
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