Mumbai: The states will seek compensation of around Rs4,000 crore from the central government as compensation for the revenue loss they suffer due to the reduction in sales tax on petrol, diesel and cooking gas, as per the decision of the committee of state finance ministers.

The reduction in fuel taxes will result in a combined revenue loss to states of around Rs8,000 crore in the remaining part of the financial year, West Bengal finance minister Asim Dasgupta, who is also the chairman of the committee, said.

The panel of state finance ministers have agreed to cut sales tax on petroleum fuels to ease the burden of high global crude oil prices on the average citizen, but wanted the centre to share half the burden.

"We will incur a loss of Rs8,000 crore by reducing the sale tax on fuels. The states cannot maintain the losses," said Dasgupta.

"We have asked the central government to share half of the losses," Dasgupta said, adding, ''We will soon meet finance minister P Chidambaram to discuss the issue."

The meeting, however, deferred a decision on sales tax rates on aviation turbine fuel for another day.

"We will seek further data from the civil aviation ministry. The issue will be discussed on 23 June when we meet in Srinagar," he said.

State-run oil marketing companies raised prices of aviation fuel by 18.5 per cent on 31 May, pushing up its cost to Rs69,227 per kilolitre in the national capital, against Rs58,387.92 earlier.

This was followed by a 9.5-11 per cent hike in base prices of petrol and diesel announced by the central government. As a result, petrol became dearer by Rs5, diesel by Rs3 and cooking gas by Rs50 per 14-kg cylinder.

The Centre imposes an additional excise duty of Rs18 and central excise duty of Rs3 on petrol. The state governments impose varying rates of sales tax on petrol and diesel.

High tax rates and increasing money supply have combined to cause a steep hike in prices of fuels and other essential commodities.