Earlier in the day, the Gujarat government had decided to reduce the value added tax (VAT) on petrol and diesel by 4 per cent, Chief Minister Vijay Rupani said. "After the central government's instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today midnight," Mr Rupani said.
The Centre had last week slashed excise duty on petrol and diesel by Rs 2 per litre. Finance Minister Arun Jaitley had said that the excise duty on petrol and diesel was reduced to give relief from relentless increase in prices and leave more money in hands of consumers. "Now it is up to state governments if they are concerned with the issue (to cut sales tax or VAT)," Mr Jaitley had said.
The finance minister had said that a large part of taxes collected on petroleum products goes to states. Besides their own VAT collection, they also get 42 per cent of central duties. He had also stressed that states must also bear a part of the impact.
The Maharashtra government levies a 46.52 per cent VAT (47.64 per cent in Mumbai) on petrol - the highest in the country. (With agency inputs)