Gujarat slashes VAT on fuel prices by 4%

Following the Centre's directive, Government of Gujarat on Tuesday announced a cut in value added tax (VAT) on retail petrol and diesel prices by four per cent . Effective from midnight, the cut in VAT on retail fuel prices will bring down price of petrol by Rs 2.93 per litre and that of diesel by Rs 2.72 per litre.

Announcing the move, Gujarat chief minister Vijay Rupani said, "we have taken the decision in the interest of the people". "The decision should not be linked with the polls. The only aim is provide relief to people," Rupani added.

After a cut in VAT, new rates on petrol and diesel applicable from midnight in Gujarat will be Rs 67.53 per litre and Rs 60.77 per litre, respectively.

Rupani had earlier said that the state would reduce taxes on petrol and diesel in the coming two or three days in line with the Centre's directive. The Centre had announced last week that excise duty on fuel would be cut, saying the move was an attempt to 'cushion the impact of rising international prices of crude oil on retail fuel prices'.

As per Gujarat government, the state exchequer is expected to lose about Rs 2316 crore on account of VAT reduction. Gujarat annually earns around Rs 12000 crore through VAT collections.

Apart from Gujarat, Maharashtra too announced a slash in tax on retail fuel from midnight. On the other hand, states like Kerala and Odisha government has been objecting to the directive citing it as 'unfavourable' for implementation.