On Wednesday, Uttarakhand too announced slashing VAT by 2% on auto fuel where petrol is taxed at 33.25% and diesel at 19.93%. This caused confusion among government officials for hours, even as netizens had a field day poking fun at an administration that didn't seem to know what was happening under its own roof."In adherence to the Centre's advice, our government has made a decision to cut 2% Value-Added Tax and cess on petrol and diesel". "In adherence to the Centre's advice, our government has chose to cut 2% Value-Added Tax and cess on petrol and diesel". After Union Finance Minister Arun Jaitley had recently written to states asking them to reduce taxes on these, they had effected the changes. This effectively means that Indian consumers are paying nearly the same for petrol and diesel when crude was at Dollars 110/barrel.
"This is our Diwali gift to the masses", Mungantiwar told PTI.
The state will have to bear burden of about Rs 940 crore for reducing petrol prices and about Rs 1,075 crore for the cut in diesel prices.
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The decision would result in the government suffering a loss Rs2,316 crore annually.
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. While BJP-ruled Gujarat and Maharashtra took the lead in lowering the tax, Congress-ruled Himachal Pradesh followed them.
A reduction in the VAT imposed by state governments will further add to a loss in revenue for states, although the degree of impact for states would be lower given that VAT is charged as percentage of total fuel price which have been rising sharply. "The state governments are not allowing to do so since it believes that it will lose revenue", said Mangave. The pump operators have demanded to bring the petrol and diesel into the ambit of goods and services tax (GST) so that the pricing difference among the states will no longer remain.
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The VAT on petrol in Mumbai, Thane and Navi Mumbai has now come down to 24 per cent from the earlier 26 per cent. "We expect reduction of at least Rs 3 to 4 per litre in petrol prices as the difference in rates between the two states is around Rs 7 per litre for petrol".
Petrol and diesel rates surged to a three-year high across the country.
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