MUMBAI: Following the Union petroleum ministry’s decision to slah VAT on Petrol and Diesel, Maharashtra government too has slashed the VAT on the petroleum products bringing down the prices of petrol and diesel by Rs 2 and Rs 1 respectively.
Maharashtra finance minister Sudhir Mungantiwar has informed the people of the decision through a tweet on Monday evening. The decision was taken at a cabinet meeting chaired by chief minister Devendra Fadnavis on Tuesday. The new rates will be applicable from midnight, a senior CMO official told the New Indian Express.
With the state govenrnment decision to follow suit, the selling price of petrol will be Rs 75.58 a litre in Mumbai. However, the decision to reduce VAT will lead to annual loss of Rs 3,067 crore a year — Rs 940 crore loss on petrol, Rs 1,075 crore on diesel and Rs 1,052 crore on central tax.
For Petrol, the state government charges 25 per cent VAT in Navi Mumbai and Thane, while in the rest of the state the VAT rates are 26 per cent. Moreover, a flat Rs 11 per liter surcharge is levied throughout the state on Petrol. On diesel, the VAT is charged at the rate of 22 per cent across the state except Navi Mumbai and Thane, where it is 21 per cent. The surcharge is Rs 2 per litre.
The VAT brings revenue of more than Rs 19,000 crore to the state exchequer which is expected to fall by Rs 2,800 crore due to today’s decision, a finance ministry official has said.
State ready to incur loss
The Gujarat government also announced that it will follow suit. Slashing of VAT will bring down the price of petrol by Rs 2.93 and that of diesel by Rs 2.72 in the state. Thus, the effective price of petrol in Gujarat from Tuesday-Wednesday midnight will be Rs 67.53 per litre and that of diesel Rs 60.77 per litre, the chief minister said.
The state earns Rs 12,000 crore per annum through VAT. Because of the cuts, the state government will incur a loss of Rs 2,316 crore annually. Earlier, the Gujarat government earlier used to charge 24 per cent VAT on petrol and diesel and an additional four per cent cess.