Published: Wed, October 11, 2017
Worldwide | By Isabel Fisher

Uttarakhand slashes Value-Added Tax, cess on petrol, diesel by 2 per cent

Uttarakhand slashes Value-Added Tax, cess on petrol, diesel by 2 per cent

Uttarakhand has chose to reduce value-added tax and cess on petrol and diesel.

Earlier, on Tuesday, after Gujarat, Maharashtra government had also slashed Value-Added Tax on retail fuel, cutting petrol prices by Rs 2 per litre and diesel prices by Re 1 per litre respectively, effective midnight Tuesday.

This decision has pushed Mumbai's fuel prices to a two month low.

BJP-ruled Gujarat and Maharashtra took the lead in reducing taxes on fuel, and in Maharashtra, the per litre rate of petrol will reduce to Rs 75.58 from Rs 77.58 and diesel to Rs 59.55 from Rs 60.55, from the intervening midnight of Tuesday-Wednesday across the state. Excise duty is imposed by the central government and is a fixed amount per litre across states.

Earlier, Gujarat had cut prices of auto fuels by 60 paise soon after the Centre's decision to reduce basic excise duty by Rs 2 a litre from October 4. Over these last three years global crude prices have halved from around Dollars 110 per barrel to USD 56 per barrel. In addition, the state also charges cess at the rate of Rs 4 per litre and Rs 1.5 per litre on petrol and diesel respectively. This effectively means that Indian consumers are paying nearly the same for petrol and diesel when crude was at United States dollars 110/barrel.

DMK Working President and Leader of Opposition in the state Assembly, M K Stalin, asked Chief Minister K Palaniswami to take a cue from Gujarat and Maharashtra in this regard. Petroleum Minister Dharmendra Pradhan has recently been rallying for the inclusion of petrol and diesel under the ambit of GST, claiming it is the only way to have a "rational price mechanism in petroleum products".

Because of this move, the state government will suffer a loss of Rs 2,316 crore annually. Given the huge difference between the maximum GST rates and current taxation rate on petrol and diesel, the government would require a cess of almost 50-75 percent to make up for lost revenue.

Maharashtra, among the highest consumers of petrol and diesel in the country, consumed 426.80 crore litres of petrol and 976.46 crore litres of diesel in 2016-17.

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