The Tamil Nadu Government has decided to do away with the 4 per cent VAT levied on cooking gas to partially off set the hike price announced by the Centre.
According to an official press release, this will be effective from July 1 and will help bring down the price of cooking gas cylinder by Rs 14.73.
A domestic LPG cylinder will now cost Rs 389.67 against Rs 404.40 previously following the Rs 50 hike announced by the Centre last week. The State Government has also assured that VAT will not be levied on cooking gas in future.
Through this decision the State Government losses VAT revenue of Rs 120 crore a year including the additional Rs 16 crore it would have made following the hike in prices announced by the Centre, the release said.
Along with the cooking gas prices, the Centre had also hiked the price of diesel by Rs 3 a litre and kerosene by Rs 2.
While announcing the increase the Central Government suggested that the State Governments bring down VAT to help offset the hike.
The Tamil Nadu Chief Minister, Ms J. Jayalalithaa, while strongly condemning the hike urged the Centre to roll back the prices.
In the release, the Chief Minister said that the Centre should look into the operational efficiency of oil companies and productivity to control prices.
Also, there is the domestic production of crude oil. Increasing cost of oil imports alone cannot be the reason to hike fuel prices.
The State Government will extend all support to cushion the public from the impact of the rising fuel prices, she said.