Petrol, diesel to cost less after Centre, state cut tax

BHUBANESWAR: The cost of petrol and diesel has become cheaper in the twin cities after the state government reduced VAT on fuel by Rs 3 per litre following the Centre’s decision to cut excise duty. From Friday midnight, petrol in the twin cities will cost Rs 101.88/litre while diesel will come for Rs 91.51/litre.
Chief minister Naveen Patnaik on Thursday announced reduction of VAT on fuel, becoming the first non-NDA state to cut tax.A day before, the Centre had announced reduction in excise duty of petrol by Rs 10/litre and diesel by Rs 5.
An official source said the decision to reduce VAT on petrol and diesel would cost the state exchequer Rs 1400 crore per annum. Besides loss of revenue, the state is also going to lose around Rs 700 crore in view of reduction of excise duty by the Centre. Hence, the total loss to the state exchequer on account of reduction in VAT is approximately Rs 2,100 crore, said a finance department official.
The decision to reduce VAT on petrol and diesel has been taken to provide relief to the public from rising fuel prices, said the official.
Arunachal Pradesh, Madhya Pradesh, Nagaland, Himachal Pradesh, Goa, Tripura, Karnataka, Mizoram, Haryana, Gujarat, Bihar and Uttar Pradesh are among the states which have slashed VAT on petrol and diesel. Major non-NDA ruled states which had mounted pressure on the Centre to cut excise duty on petrol and diesel are yet to reduce VAT. In May last year, the state government had hiked VAT on petrol from 26% to 32% and diesel from 26% to 28% with an aim to increase revenue base in view of the Covid-19 pandemic. The dip in fuel prices after reduction of excise duty and VAT by the Centre and the state government has come as a sigh of relief for the consumers.
“We appreciate the decision of both the Centre and state to cut tax. But the price of petrol and diesel need to be reduced further for the benefit of the public. Increase in diesel price has a cascading effect on essential commodities. Both the Centre and states should come up with a concrete solution to deal with it,” said Rati Ranjan, a professional based in the city.
The Congress continued to attack the Centre and state, terming the reduction in excise duty and VAT on fuel not adequate. The BJD, which had decided to launch a statewide agitation from Friday on rising fuel price, has decided to postpone it for 10 days and urged the Centre to reduce the price of LPG. The BJP, meanwhile, said the state government should cut more VAT as states governed by the saffron party have reduced it by Rs 7.