In a relief to the citizens of Maharashtra and Gujarat just ahead of Diwali, the two states have slashed value added tax (VAT)on petrol and diesel. The Gujarat government on Tuesday reduced the VAT on petrol and diesel by 4 percent, becoming the first state to announce a reduction in VAT while, the Maharashtra Cabinet has decided to slash prices of petrol and diesel by Rs 2 and Re 1 respectively, effective midnight.
The effective price of petrol in Gujarat from mid-night today will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre, the chief minister added. The state government will have to take a hit of Rs 2,316 crore annually on back of VAT reduction.
The reduction in tax comes just before Diwali in the state, where the Assembly polls are due around the year-end. 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, Gujarat Chief Minister Vijay Rupani said.
The lowering of tax in the poll-bound Gujarat follows Union Finance Minister Arun Jaitley recently writing to all state governments nudging them to reduce taxes on petrol and diesel.