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Falling in line with other States, the Maharashtra Government on Wednesday decided to reduce value added tax (VAT) on diesel and kerosene by two percentage points.
In Mumbai, Navi Mumbai and Thane city, diesel would be available at Rs 45.12 and at Rs 44.13 in rest of Maharashtra, while kerosene will be available at Rs 12.
In effect diesel will be cheaper by 72 paise and kerosene by 28 paise. The new prices are expected to come into effect soon.
Yesterday, the Union Finance Ministry had written to several State governments urging them to reduce local taxes on diesel, kerosene and domestic LPG in line with the duty cuts undertaken by the Union Government last week.
The Chief Minister of Maharashtra, Mr Prithviraj Chavan, addressing the media after the Cabinet meeting said that in Mumbai, Navi Mumbai and Thane city, VAT on diesel will be reduced from 26 per cent to 24 per cent and 23 per cent to 21 per cent in rest of Maharashtra. On kerosene, the VAT reduction will be from 5 per cent to 2 per cent, he said. Mr Chavan said, “In the State budget for current fiscal, 4 per cent VAT on cooking gas was not levied. Therefore, there is no room for further reduction in prices. Other States have merely removed the VAT.”
He added the State Government will have to bear a burden of at least Rs 1,400 crore following the decision to reduce VAT. The State Government will have to resort to cost cutting and better recovery of VAT, excise and transport taxes so as to boost the revenue, Mr Chavan said.
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