Maharashtra, Gujarat cut VAT on petrol and diesel

A day after the Gujarat government announced a reduction in value added tax on petrol and diesel by 4 per cent, the Maharashtra government also today announced a nominal Rs2 reduction in VAT on a litre of petrol and Re1 per litre of diesel, effective midnight tonight.

After the new rates come into effect, petrol will cost Rs75.58 per litre and diesel will cost Rs59.55 in the state.

Maharashtra charges 25 per cent VAT on petrol in Mumbai, Navi Mumbai and Thane, while the rest of the state pays 26 per cent VAT on it. On diesel the state levies 21 per cent VAT in Mumbai, Navi Mumbai and Thane and 22 per cent in the rest of the state.

In Gujarat, chief minister Vijay Rupani said with the reduction of VAT, the price of petrol will come down by Rs2.93 and that of diesel by Rs2.72 in the state.

The step that followed the central government's decision to cut excise duty on petrol and diesel by 2 per cent, comes just before Diwali and ahead of the assembly polls due by year-end and follows .

''After the Central government's instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today midnight,'' Rupani said at a press meet in Gandhinagar on Monday.

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 decision would result in the government suffering a loss Rs2,316 crore annually.

The two BJP-ruled states announced the tax reduction on petrol and diesel after union finance minister Arun Jaitley recently wrot to all state governments nudging them to reduce taxes on petrol and diesel.