Maharashtra CM Eknath Shinde announces reduction in VAT on fuel | Mumbai News – Times of India

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MUMBAI: For the people of Maharashtra, petrol and diesel may get cheaper soon. Upon winning the crucial trust vote in the state assembly, chief minister Eknath Shinde on Monday announced that his administration will soon take a decision to offer some relief to the people of the state by reducing VAT on fuel.
In his emotional thanks-giving speech on the floor of the house he indicated that his government would reduce the VAT on petrol and diesel as a follow up to the prime minister Narendra Modi’s appeal to do so post reduction in excise duty by the centre over a month ago.
It may be recalled that in May this year several states had immediately reduced their taxes on fuel over and above the reduction in excise duty made effective by the centre. The reduction in the state will take place after the resolution is passed in the cabinet meeting, Shinde pointed out.

On May 22 after the Central government reduced excise duty on per litre of petrol and diesel by Rs 8 and Rs 6, the state government’s VAT, which is levied on an ad Valorem (according to value) basis had automatically reduced by Rs 2.08 and Rs 1.44 a litre on petrol and diesel respectively.
Despite the natural reduction in VAT after the centre’s reduction, there was a pressure on the state government to give further relief from its own kitty. The May 22 decision has already led to reduction in the state’s VAT revenue by Rs 80 crore per month for petrol and Rs 125 crore per month for diesel. However, there was no attempt from the state to effect any reduction on its own.

The MVA government had called the relief by the Modi government as an eye wash. Now that a BJP-supported government has taken over in Maharashtra, the VAT on petrol and diesel must be reduced substantially, because the present VAT rates and additional Cess are very exorbitant in the state, say experts.
“At present the state recovers Rs. 20.14 per liter as 26% VAT and additional Rs. 10.12 per liter as Cess over and above the VAT, totaling to Rs. 30.26 per liter. As compared to this the Center recovers only Rs. 19.90 per liter as excise duty. This means Maharashtra State tax is more by Rs. 10.36 per liter in comparison to that of the Center,” said senior petrol dealer and pricing expert Kedar Chandak.

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As far as Diesel is concerned the state recovers Rs. 17.80 per liter as 24% VAT and additional Rs. 3 per liter as Cess, totaling to Rs. 20.80 per liter. As opposed to this, the Center recovers only Rs. 15.80 per liter as excise duty. Thus the Maharashtra State tax on Diesel is more by Rs. 5 per liter as compared to the Center, he said. “Thus the existing petrol rate of Rs. 111.90 can be reduced to Rs. 101.78 per liter. Similarly the existing Diesel rate of Rs. 97.22 can be reduced to Rs. 94.22 per liter,” he pointed out.
While announcing the reduction in VAT, chief minister Eknath Shinde reiterated that his government would firmly and decisively make the state free from farmers’ suicides.
He also announced Rs 21 crore for the overall development of Hirkani village situated on the foothills of Raigad fort, once the capital of Maratha emperor Chhatrapati Shivaji.

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