NEW DELHI: In a major relief to the common man, the government on Thursday announced a Rs 2.50 per litre cut in petrol and diesel prices by reducing excise duty by Rs. 1.50 and asking oil firms to absorb another Re 1. The decision announced by Finance Minister Arun Jaitley was followed by several BJP-ruled states giving an overall relief of Rs 5 per litre.

The finance minister said the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues.

So far, these states have decided to cut fuel prices by Rs 2.50, in addition to Centre's Rs 2.50 per litre reduction in diesel and petrol prices:

  • Gujarat

  • Maharashtra (only petrol)

  • Uttar Pradesh

  • Himachal Pradesh

  • Jharkhand

  • Assam

  • Arunachal Pradesh

  • Madhya Pradesh

  • Tripura

  • Haryana

  • Goa

  • Chhattisgarh

  • Uttarakhand

  • Jammu and Kashmir


Kerala government, which had recently reduced VAT on the fuels, said it would not cut the tax now and asked the Centre to restore prices to 2014 levels before it can consider further cuts. Last month, the governments of Karnataka, West Bengal, Rajasthan and Andhra Pradesh had cut taxes on petrol and diesel. The Punjab government said it would take a call in this regard on Friday.

Almost half of the fuel price is made up of taxes. The centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy value-added tax (VAT).

Since mid-August, the petrol price has risen by Rs 6.86 a litre and diesel by Rs 6.73 - the most in any six-week duration after the daily price revision was introduced in mid-June last year.

The Centre's decision was announced after high-level consultations involving Prime Minister Narendra Modi, BJP President Amit Shah, Finance Minister Arun Jaitley, Petroleum Minister Dharmendra Pradhan and Railway Minister Piyush Goyal.