A day after the Centre’s decision to reduce excise duty, the Shiv Sena led Maha Vikas Aghadi government on Sunday cut VAT by Rs 2.08 on petrol and Rs 1.44 on diesel per litre from today onwards. In Mumbai, petrol prices will be reduced by Rs 11.24 and diesel by Rs 8.93 per litre.
The state government is expected to monthly lose Rs 80 crore on petrol and Rs 125 crore on diesel following the reduction in VAT. The government will incur a revenue loss of Rs 2,500 crore annually. The state government during the annual budget had estimated a mobilisation of almost Rs 44,000 crore through VAT on auto fuel in 2022-23.
Chief Minister’s Office in a statement said that during June 16,2020 and November 4, 2021 the Centre was charging a levy of Rs 7.69 per litre on petrol and Rs 15.14 per litre on diesel. Between March and May 2020, the Centre had increased excise duty by Rs 13 on petrol and Rs 16 per litre on diesel.
In Maharashtra, daily sale of diesel is 2.35 crore litre and 1.15 crore litre of petrol. The state government charges 25% VAT which Rs 21.35 per litre on petrol and additional cess of Rs 10.12 per litre. On diesel, the state government charges 21% VAT which is Rs 16.86 per litre and additional cess of Rs 3 per litre. However, the state government has not mentioned whether the reduction was in VAT or in additional cess.
Chief Minister Uddhav Thackeray on Saturday had claimed that the Centre’s move to reduce excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre was not enough.
Thackeray, after attending the meeting chaired by Modi on COVID 19 review on April 27 had said the state government had already reduced VAT on natural gas to 3% from 13.5%. "Maharashtra gets 5.5 per cent of central tax. Its share in total direct tax is 38.3 per cent. Maharashtra collects the highest GST of 15% in the country. Combining both direct taxes and GST, Maharashtra is the number one state in the country. Despite this, the Centre has yet to clear Rs 26,500 crore to the state towards GST compensation,’’ he added.
Further, he had clarified that the Centre’s share in taxes on diesel sold in Mumbai is Rs 24.38 per litre and state’s is Rs 22.37 per litre while on petrol the Centre’s share in taxes is Rs 31.58 per litre against state’s is Rs 32.55 per litre. ‘’Therefore, it is not a fact that petrol and diesel have become more expensive due to the state.
