Ahmedabad: The BJP government in Gujarat has announced a 4% reduction of VAT (Value Added Tax) on diesel and petrol.
Gujarat is the first state to have done so after the Centre urged states to reduce taxes on fuel amid a growing hue and cry over rising fuel prices.
The opposition Congress cried foul, alleging that the step has been taken by the government with an eye on the upcoming state poll and is a result of the pressure built up because of the response to Congress Vice-President Rahul Gandhi's campaign tour in the state.
“The rate reduction has been done with an eye on polls. They (government) have come under pressure after looking at the response Congress Vice-President Rahul Gandhi has been getting during his campaign tour in Gujarat,” Congress spokesperson Shaktisinh Gohil said.
With Tuesday’s announcement, petrol will be cheaper by Rs 2.93 per litre and diesel by Rs 2.72 per litre in Gujarat. The state levies a 28.96% VAT on petrol and diesel.
"After the central government's instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today mid-night," Rupani said at a press meet on Tuesday morning.
The effective price of petrol in Gujarat from mid-night on Tuesday will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre, the chief minister added.
The state government is bound to suffer a loss of Rs 2,316 crore to the exchequer with this announcement.
Earlier this month, the central government had for the first time in its tenure reduced the excise duty on petrol and diesel prices and asked the state governments to do the same with VAT.
Union Finance Minister Arun Jaitley 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 said.
Oil Minister Dharmendra Pradhan had also said states should cut sales tax or VAT on petrol and diesel by 5 per cent.
Unlike the Centre, states levy VAT as an ad valorem duty which rises every time there is an increase in price. The Centre, Pradhan said, sacrificed Rs 26,000 crore in revenue in the cut in excise duty.
With PTI inputs
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