Fuel Tax Cut: After Centre Slashes Rates, These States Reduce VAT On Petrol, Diesel

Fuel Tax Cut: The excise duty cut would translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 per litre on diesel after taking into account its impact on other levies.

People get their vehicles filled with fuel at a petrol pump in Gurugram, Sunday, May 22, 2022. ( Image Source :PTI )

New Delhi: After the Centre announced a reduction in excise duty on fuel, several state governments slashed the Value Added Tax (VAT) on petrol and diesel. On Saturday, the Centre had cut excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre to offer relief to the common man battered by high fuel prices that have also pushed inflation to a multi-year high.

The relief comes on the back of rising inflation that triggered an increase in the prices of essential goods.

The excise duty cut would translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 per litre on diesel after taking into account its impact on other levies.

Union finance minister Nirmala Sitharaman on Sunday said the two rounds of duty reductions including the November cut will cost the exchequer Rs 2.2 lakh crore annually and the states’ share from the tax pool will not be affected as the Centre had opted to cut cess on petrol and diesel, which are outside the divisible pool.

5/ The duty reduction made yesterday has an implication of ₹ 1,00,000 cr a year for Centre. The duty reduction made in November’21 has an implication of Rs 1,20,000 cr a year for Centre. Total revenue implication to Centre, on these two duty cuts is thus ₹ 2,20,000 cr a year.

— Nirmala Sitharaman (@nsitharaman) May 22, 2022

Check List Of States That Reduced VAT On Petrol And Diesel

Kerala

The Kerala government announced a reduction in taxes on petrol and diesel prices. On Saturday, the Kerala government announced a cut in tax on the prices of petrol and diesel by Rs 2.41 and Rs 1.36 per litre respectively.

Announcing the cut on state tax, Kerala Finance Minister K N Balagopal said the Union government said: "The Union government has partially reduced the huge tax on petrol and diesel. Kerala government welcomes this decision."

"The state government will reduce state tax on the price of petrol and diesel by Rs 2.41 and Rs 1.36 per litre respectively," he said.

Rajasthan

The Rajasthan government also went ahead and reduced VAT on petrol by Rs 2.48 per litre and diesel by R 1.16 per litre.

Chief minister Ashok Gehlot tweeted, "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 litre in the state."

केन्द्र सरकार द्वारा पेट्रोल-डीजल की कीमतों में की गई एक्साइज कटौती से राज्य सरकार का पेट्रोल पर 2.48 रुपये प्रति लीटर एवं डीजल पर 1.16 रुपये प्रति लीटर वैट भी कम होगा। इससे प्रदेश में पेट्रोल 10.48 रुपये एवं डीजल 7.16 रुपये प्रति लीटर सस्ता होगा।

— Ashok Gehlot (@ashokgehlot51) May 21, 2022

Maharashtra

On Sunday, the Shiv Sena-led Maharashtra government reduced the Value Added Tax (VAT) on per litre petrol by Rs 2.08 and diesel by Rs 1.44. A statement issued by the government said the state exchequer will have to bear an annual loss of Rs 2,500 crore as a result of this decision.

After reducing the VAT on petrol and diesel, the per month revenue from petrol will reduce by Rs 80 crore, while that from diesel by Rs 125 crore.

Odisha

The Odisha government also reduced taxes on petrol and diesel by Rs 2.23 and Rs 1.36 a litre respectively. The new petrol and diesel prices from 6 am on Sunday in Odisha were Rs 102.25 and Rs 94.86 respectively.

Lauding the Centre for the reduction in excise duty on petrol and diesel, Chief Minister Nitish Kumar on Sunday hinted that his government might do its bit after due deliberations.

The Bihar government is yet to announce any cut in fuel prices,