More states follow centre's excise duty reduction to effect fuel price cuts
05 November 2021
Several states have effected reduction in the value added tax on petrol and diesel after the central government announced a reduction in excise duty on these auto fuels by Rs5 and Rs10, respectively, bringing down the effective retail prices for consumers.
Retail prices of petrol and diesel cooled off in several states on Thursday as the record reduction on excise duty was passed on to customers by oil marketing companies.
Reduction in end prices on pumps in several states were higher than excise duty cuts announced by entre as states charge local sales tax or Value-Added Tax (VAT) over the base price and excise duty levied by the central government. The reduction was higher in states with higher VAT.
Uttar Pradesh the sharpest cut reduction in retail prices of petrol and diesel of Rs12 per litre each, followed by a similar reduction by Haryana as well.
“Now petrol will be cheaper by Rs12 and diesel by Rs17 per litre in the state," tweeted Himachal Pradesh CM Jairam Thakur.
Karnataka brought down petrol prices by Rs13.30 per litre from Rs113.93 on 3 November to Rs100.63 and that of diesel by Rs19.47 per lite from Rs104.50 on 3 November to Rs85.03 now.
Almost all states ruled by the BJP and its allies, including Assam, Tripura, Manipur, Goa, Uttar Pradesh, Gujarat, Himachal Pradesh, Haryana, Uttarakhand, Bihar, Odisha and Arunachal Pradesh announced tax reductions on petrol and diesel while opposition ruled states like West Bengal and Kerala decided to keep duties unchanged.
Opposition leaders instead said the centre’s reduction in duties will hit states since they have 41.5 per cent share in central taxes. They also blamed the centre for not rolling back higher levies completely which were affected after the Covid outbreak.
Goa, Assam, Manipur, Karnataka, Tripura and Gujarat slashed petrol prices by Rs7 per litre over and above what was announced by the centre, while Uttarakhand reduced VAT by Rs2, Odisha by Rs3 per litre on both petrol and diesel and Bihar by Rs3.20 per litre on petrol and Rs3.90 on diesel.
Arunachal Pradesh CM Pema Khandu also announced a relief of Rs10.20 per litre in petrol and Rs15.22 per litre in diesel after the relief given both by the centre and the state.
Madhya Pradesh announced 4 per cent reduction in VAT on petrol and diesel. Petrol prices were reduced by Rs6.07 per litre and diesel by Rs11.75 per litre in Delhi.
The centre on Wednesday announced a reduction in excise duty on petrol and diesel by Rs5 and Rs10, respectively, from Thursday with a similar reduction in the prices of petrol and diesel.
In recent months, crude oil prices have witnessed a global upsurge. Consequently, domestic prices of petrol and diesel had increased in recent weeks exerting inflationary pressure.