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Maharashtra reduces VAT on diesel, kerosene

Mumbai: Maharashtra on Wednesday decided to reduce the value added tax (VAT) on diesel and kerosene by 2 per cent in a bid to mitigate the impact of the recent fuel price hike.

Chief Minister Prithviraj Chavan said at a press conference that in Mumbai, Thane and Navi Mumbai the VAT on a litre of diesel would be reduced from 26 to 24 per cent and in the rest of the State, from 23 to 21 per cent. For kerosene, sold through the public distribution system, the tax levy a litre will now be down to 3 per cent from 5 per cent.

The decrease in VAT will offset the diesel price by approximately 72 paise and the price of kerosene by 28 paise a litre. With this move, the government will have to forgo revenue of Rs. 438 crore for the current year.

Maharashtra had not imposed a tax on cooking gas, for which it foregoes a yearly sum of Rs. 300 crore. In addition, a reduction in the excise and Custom taxes will amount to further losses of at least Rs. 49,000 crore.

The Maharashtra Pradesh Congress, which led a delegation to Mr. Chavan with the demand for tax reduction, welcomed the decision.

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