Excise duty cut by centre will reduce the effective rate of VAT on petrol-diesel in states

Due to the reduction in the prices of petrol and diesel by the central government, VAT in Rajasthan will be reduced by Rs 2.48 per litre on petrol and Rs 1.16 per litre on diesel. With this, petrol will be cheaper by Rs 10.48 and diesel by Rs 7.16 per litre in the state.

Taking to Twitter, the state chief minister Ashok Gehlot wrote, "Due to the reduction in the prices of petrol and diesel by the central government, the state government will reduce VAT by Rs 2.48 per litre on petrol and Rs 1.16 per litre on diesel. With this, petrol will be cheaper by Rs 10.48 and diesel by Rs 7.16 per litre in the state."

The central government imposes excise duty on petrol. Similarly, the state govt levies VAT ad valorem on fuel. VAT on petrol varies with each state. As centre has reduced the excise duty on diesel and petrol, the VAT automatically gets reduced.

Centre has many times appealed to states, especially non-BJP ruled states, to reduce VAT on petrol and diesel, but the states had not done so.

Meanwhile, the Kerala government also said that the excise duty cut by centre on petrol diesel will effectively reduce the rate of petrol and diesel by Rs 2.41 and Rs 1.36 respectively.

Earlier on Saturday, in a significant step aimed at providing relief to people from high fuel prices, the Centre announced a reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

Making the announcement in tweets, Finance Minister Sitharman said that the move will have a revenue implication of around Rs 1 lakh crore per year. The minister, who made several other announcements aimed at curbing inflation, said subsidy will be provided on cylinders under the Ujjwala scheme.

She urged states to also reduce VAT on petroleum products to give relief to the common man.

The government had similarly reduced excise duty on petrol and diesel in November last year on the eve of Diwali. It had reduced excise duty on petrol by Rs 5 a litre and on diesel by Rs 10 a litre. (ANI)