A dozen State Govts cut VAT on fuel to provide bigger relief

Patna: About a dozen state governments from Uttarakhand in the north to Karnataka in the south have reduced VAT rates on petrol and diesel to provide a bigger gain of price reduction to consumers this Diwali after the Union government on Wednesday announced that excise duty will be reduced by Rs 5 for petrol and Rs 10 for diesel from November 4.

This has resulted in petrol and diesel prices falling between Rs 7 and Rs 17 a litre in these states, much higher than the levels if only Union government's excise duty cuts were maintained.

Accordingly, in Uttar Pradesh, petrol and diesel prices have not fallen by just Rs 5 and Rs 10 per litre respectively due to central excise duty cut, but it has fallen by over Rs 12 per litre due to VAT cut by the state. Like UP, the Haryana government has also reduced VAT on fuel prices in the state. Now both petrol and diesel will be cheaper by Rs 12 per litre.

While Tripura announced that petrol and diesel will be cheaper by Rs 12 and Rs 17, respectively per litre from Thursday.

Similarly, Uttarakhand has also announced a reduction in VAT on petrol by Rs 2 per litre in the state while the Karnataka government has announced that it is going to reduce the VAT on both petrol and diesel by Rs 7 per litre from November 4 bringing bigger relief to fuel consumers.

Gujarat, Assam, Sikkim, Manipur and Goa governments have also announced slashing the VAT by Rs 7 on both petrol and diesel in their states.

Taking a cue from the Union government, the Bihar government on Thursday reduced VAT by Rs 3.90 per litre on petrol and Rs 3.20 per litre on diesel. Chief Minister Nitish Kumar announced the reduction of VAT in fuel prices through his official Twitter handle. With this, the rate of petrol in Bihar dipped by Rs 8.20 per litre while diesel price fell by Rs 15.10 per litre.

Meanwhile, RJD chief Lalu Prasad sharply reacted to the decision of the Modi government saying that the Union Government should have reduced the petrol price by Rs 50 not by Rs 5.

Odisha government too on Thursday announced a VAT reduction of Rs 3 per litre on both petrol and diesel, which would be applicable in the coastal state from midnight of November 5.

Meanwhile, Kerala Finance Minister K N Balagopal, speaking to reporters said that the Union government's decision was only a "face-saving measure" and it has led to an additional decrease of around Rs 1.5 and Rs 2.5 in petrol and diesel prices. This has led to petrol and diesel prices in Kerala reducing by around Rs 6 and Rs 12, respectively, he said.

However, he reacted that the state cannot reduce taxes on the same lines as the Union government since the Kerala government and its various bodies, like KSRTC, are under immense burden due to the rise in fuel prices.

Apart from Kerala Government, another non-BJP ruled state, West Bengal also follows the same path. The TMC termed the Union government's decision to slash excise duty on petrol and diesel by Rs 5 and Rs 10 per litre respectively a "mere eyewash".

TMC state general secretary and spokesperson Kunal Ghosh pointed out that the meagre reduction was announced after the rates hit the roof. "They should bring down the main price component," he tweeted.The TMC leader also contended that the Union government levies higher tax on petroleum products than the state and as such the reduction in excise duty wouldn't have much bearing on the Union government's exchequer.

He further alleged that the Centre gives BJP-ruled states more funds when compared to those which have opposition parties at the helm