Petrol cheaper by Rs 2, diesel by Re 1

Petrol cheaper by Rs 2, diesel by Re 1

Maharashtra, Gujarat & Himachal cut VAT on fuel

MAHARASHTRA, Gujarat and Himachal Pradesh onTuesday announced cuts inValue Added Tax (VAT) on petrol and diesel, effective from midnight, to bring down fuel prices in the three states.

On Wednesday, Uttarakhand too announced slashing VAT by 2% on auto fuel where petrol is taxed at 33.25% and diesel at 19.93%. In a major development, Uttarakhand government has announced that it cut 2% cess and 2% Value-Added Tax on petrol and diesel prices. Recently, the excise duty on petrol and diesel was brought down by the Centre, by Rs 2 per litre. In addition, the state also charges cess at the rate of Rs 4 per litre and Rs 1.5 per litre on petrol and diesel respectively.

A discount of 49 paise per litre on petrol and 41 paise per litre on diesel will be available for users of government's flagship Bhim App to make payment. Making the announcement about Value-Added Tax reduction on petrol and diesel on Tuesday, Finance Minister Sudhir Mungantiwar termed it as a "Diwali gift" to people of the State. Centre's revenues from petroleum products nearly doubled from ₹1,72,066 crore in 2014-15 to ₹3,34,534 crore in 2016-17, while it would part with 42% of the earnings with the State governments.

Finally, here is some relief for the people of Uttarakhand in terms of fuel prices. Over these last three years global crude prices have halved from around Dollars 110 per barrel to USD 56 per barrel. Concessions for industrialists to continue post-GST: The tax breaks, incentives and concessions granted to the industrialists have ended after the advent of the GST regime in the country.

He said the decision will cause an annual revenue loss of Rs 2,000 crore to the state exchequer. This means the cumulative rate of current taxes (VAT+excise) amounts to a whopping 71 percent on diesel and 99 percent on petrol which was around a mere 15 percent at the start of 2014. "There will be a big relief to the people from rising petrol and diesel prices", a spokesperson of the state government has been quoted as saying in a report in The Indian Express. Petrol and diesel, on the other hand, are basic needs for retail and commercial consumers. Given the huge difference between the maximum GST rates and current taxation rate on petrol and diesel, the government would require a cess of almost 50-75 percent to make up for lost revenue.

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