OIL & GAS

Mumbai: Sena-led state may cut VAT on fuel to score against Centre

All eyes are set on the state budget, to be presented on Monday, as there is a possibility for the Maharashtra government to marginally reduce value-added tax (VAT) on petrol and diesel to score brownie points over the BJP at the Centre, which has not given any relief in excise duty. The price of petrol in Mumbai has peaked to an all-time high of Rs 97.57 per litre while diesel costs Rs 86.6 per litre.

A few days ago, deputy chief minister and finance minister Ajit Pawar had hinted at some relief in fuel prices. Political experts say that any tax relief given at this juncture will be remembered by citizens for a long time. But it could be a tough call for Maharashtra, as it earns over Rs 25,000 crore annually from VAT on fuel. Every Re 1 hike per litre of petrol and diesel gives the state additional VAT of Rs 140 crore and Rs 275 crore, respectively, officials said. Also, VAT on fuel is a major revenue earner for the state exchequer apart from excise on liquor, property registration charges and stamp duty, and tax on vehicles.

On Sunday, petrol inched close to the Rs 100 mark, costing Rs 99.72 per litre in Parbhani, and diesel approached Rs 90 in various districts across Maharashtra. Experts told TOI that 66% of the price the consumer pays for petrol and 60% for diesel goes in taxes levied by the Centre and the state.

Source
ET Energy World
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