According to sources in the finance ministry, during a recent meeting, the Department of Revenue even indicated that there is still some headroom for the government to increase petroleum taxes.
Diesel prices have stayed at the same level since last October 3, completing 11 days when the fuel did not see any revision.
The decision came after Daniel Craig-starrer 'No Time to Die' moved to its release slot of April 2, 2021.
Diesel sales continue to be in the negative territory, with demand falling 7 per cent year-on-year though the demand was 22 per cent higher over August 2020.
The government’s decision drew flak from the AP Lorry Owners Association (APLOA).
Rajasthan saw the steepest increase with VAT on petrol jumping from 30% during March to 38% now, while VAT on diesel rose from 22% to 28%.
Petrol price in the national capital fell to Rs 81.86 a litre from Rs 81.99 per litre. This is the second reduction in rates in three days.
Data on fuel demand for August shows clear indications that renewed lockdowns across several states resulted in a sharp decline in consumption.
This is the first reduction in diesel price since mid-March when Indian Oil, Bharat Petroleum and Hindustan Petroleum froze rates for 82 days to adjust a record hike.
Prominent theatre chain AMC has announced that the film, which had to stop its theatrical run in March due to the coronavirus pandemic, will be back in its cinema houses on August 20.
Fuel demand fell to 15.67 million tonnes in July, 11.7 per cent lower compared with 17.75 million tonnes consumption in the same month a year ago.
The retailers will necessarily have to set up five per cent of the total outlets in rural areas within five years.
After a Cabinet meeting, Chief Minister Arvind Kejriwal said VAT on diesel would be brought down to 16.75 per cent from 30 per cent.
Transporters felt that the government will also see an increase in revenue because now most of trucks will now get refueled in the city.
The auto major may look at having a bigger BS-VI diesel engine at a later stage if there are enough customers for diesel-powered big SUVs and sedans.