Ahmedabad, Oct 10, 2017: Amid furore on hike in fuel prices, the state government of Gujarat on Tuesday morning announced 4% reduction in VAT (Value Added Tax) on petrol and diesel.
Addressing the media, chief minister Vijay Rupani said that “After the central governments instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today mid-night.”
With this rate cut, the price of petrol will come down by Rs 2.93 and that of diesel by Rs 2.72 in the state respectively. The effective price of petrol in Gujarat from midnight will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre. However, after this move, the state government will suffer a loss of Rs 2,316 crore annually. “But we have taken this decision in the interest of people,” Rupani said.
The decision of Gujarat’s government comes after Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan had asked the states to cut sales tax or VAT on petrol and diesel to provide further relief to consumers from high fuel prices.
Earlier this month, Jaitley had said the Rs 2 per litre cut in excise duty on petrol and diesel was done to give relief from relentless increase in prices and leave more money in hands of consumers. “Now it is up to state governments if they are concerned with the issue (to cut sales tax or VAT),” he was quoted as saying by media.
Oil Minister Dharmendra Paradhan had thereafter, asked the state governments to cut VAT on the fuel products by 5 per cent, saying that states are the biggest beneficiaries of the revenues generated from petrol and diesel.
“States are the biggest beneficiary. They get all of the VAT collection plus they also get 42 per cent of the central excise collections. The amount remaining with the Centre is used to finance centrally sponsored schemes in states,” Pradhan said.