Rajasthan, Andhra Pradesh reduce VAT on fuel

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The states of Rajasthan and Andhra Pradesh have reduced VAT on fuel, giving some respite to the people in these states. With prices of petrol and diesel touching new highs, there have been multiple demands to cut excise duty on fuel, but the Union government stated that it had no such intention.

Petrol-diesel-price
Fuel prices have reached an all time high, prompting state governments to reduce taxes.

While Rajasthan has reduced VAT on diesel and petrol by 4 per cent, Andhra Pradesh has reduced fuel prices by Rs.2 per litre (for both diesel and petrol). The effective reduction in fuel prices in Rajasthan is around Rs.2.5 per litre.

Following the reduction, VAT on petrol in Rajasthan is 26 per cent, while the VAT on diesel is 18 per cent. The move could cost the state government losses of around Rs.2,000 crore.

The state of Andhra Pradesh could lose around Rs.1,120 crore in revenue.

The West Bengal government also announced a drop in fuel prices, with the state government reducing costs by Re.1 per litre. Other states could follow suit and reduce state taxes on fuel.

At present, petrol attracts an excise duty of Rs.19.48/litre with the excise duty on diesel being Rs.15.33/litre.

The drop in the value of the rupee has also had an impact on the fuel prices, with imports becoming costlier. Petrol prices recently breached the Rs.90/litre barrier in Maharashtra, with prices touching Rs.90.11 per litre in Parbhani.

Sources: Economic Times, LiveMint, Business Today.

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