Madhya Pradesh cuts 5 per cent VAT on diesel and 3 per cent on petrol, new rates to be effective from midnight

BT Online   New Delhi     Last Updated: October 13, 2017  | 13:44 IST
Madhya Pradesh cuts 5 per cent VAT on diesel and 3 per cent on petrol, new rates to be effective from midnight

The Madhya Pradesh government today cut the value added tax or VAT on fuel products. The state government has reduced 5 per cent VAT on diesel and 3 per cent on petrol, new prices will come into effect from midnight, Chief Minister Shivraj Singh Chouhan told news agency ANI. With this move, Madhya Pradesh became the fifth state to bring down the tax on petroleum products. Earlier this week, three BJP-ruled states - Gujarat, Maharashtra and Uttarakhand- cut the state tax. Himachal Pradesh, which is ruled by the Congress, has also reduced vat on fuels. 

The states' actions have come after the Union Oil Minister urged the state governments to reduce the burden from consumers by bringing down the tax.  The Minister also said every state has different VAT rates on fuel and if each of them reduce by 5 per cent, consumers will benefit. "It is the responsibility of states to reduce VAT," Pradhan said adding many states levy VAT on auto fuel at 24-26 per cent.

Maharashtra Chief Minister Devendra Fadnavis has reduced petrol and diesel prices by Rs 2 and Rs 1 respectively. Gujarat Chief Minister Vijay Rupani slashed the state tax on fuel products by 4 per cent. In Uttarakhand, the VAT was reduced by 2 per cent. The Himachal Pradesh government brought down the state tax on petrol and diesel by 1 per cent.

The central government recently cut down excise duty on petrol and diesel by Rs 2 a litre. The government was under pressure from people and as well as the opposition parties for keeping fuel prices high -due to excise duty- while global prices remained low. Last month, the petrol price in Delhi touched Rs70.83 per litre, highest since 16 January. The government had in November 2015 and January 2016 raised excise duty on petrol and diesel five times to take away gains arising from plummeting international oil prices.

In the first week of this month, Finance Minister Arun Jaitley had nudged the states governments to cut VAT on petrol and diesel to provide relief to consumers from high fuel prices. The Finance Minister said the Rs 2 per litre cut in excise duty on fuel was done to give relief to consumers.

"Now it is up to state governments if they are concerned with the issue (to cut sales tax or VAT)," Jaitley said. He further said that states governments such as Kerala and Delhi were at the forefront of demanding a cut in duties. "And therefore state governments must really look at their own VAT collections," the Finance Minister had said. 

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