Maharashtra, Kerala, Rajasthan cut VAT on petrol, diesel

New Delhi/Mumbai/Chennai: Maharashtra, Rajasthan and Kerala have decreased VAT on petrol and diesel after Finance Minister Nirmala Sitharaman's call to provide further relief to consumers following a cut in excise duty by the Centre, though some other states appeared reluctant citing their inability to take more strain on revenue.

The Shiv Sena-led Maharashtra government slashed the VAT on petrol by Rs 2.08 per litre and diesel by Rs 1.44 per litre. A statement issued by the government said the state exchequer will have to bear an annual loss of Rs 2,500 crore as a result of this decision. However, the DMK-led government in Tamil Nadu said that it is neither fair nor reasonable to expect States to reduce their taxes.

State Finance Minister Palanivel Thiaga Rajan said the central government had never consulted states when it increased the taxes and Tamil Nadu was already incurring a loss of over Rs1,000 crore due to the earlier tax cut announced by the union government in November 2021.

Despite the tax reduction announced by the Centre on Saturday, the rates were still high compared to 2014, he pointed out. "The Union Government's levies on petrol have gone up substantially in the past seven years. Though the revenue to the Union Government has increased manifold, there has not been a matching increase in the revenues to states. "This is because the Union Government has increased the cess and surcharge on petrol and diesel while reducing the basic excise duty that is shareable with the states," he averred.