Uttarakhand Finance Minister Prakash Pant announced on Wednesday that the state government has made a decision to cut the cess and Value Added Tax on fuel by 2% each, ANI reported.
With Gujarat, Maharashtra and Himachal Pradesh reducing Value Added Tax (VAT) on fuel from Wednesday, towing the line of the Centre which reduced the Central Excise duty by ₹2 on October 4, other States, including Karnataka, are under pressure to reduce the rates.
Implementation of GST on petrol and diesel prices would bring about pricing parity across states and facilitate free movement across the country. At a time when Indians are looking to save on petrol and diesel, this discount is also likely to boost the number of BHIM App downloads. The government also provides discounts and cashback on various facilities like booking a hotel using the BHIM App, but with the need of the hour to lower the petrol and diesel prices, a discount is being offered on fuel as well.
However, Mumbai saw decline of almost Rs 2 per litre and Rs 1 per litre in their petrol and diesel prices at Rs 75.59 per litre and Rs 59.58 per litre respectively.
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The last time the State GovernmenthadhikedVAT onfuelwas inJanuary 2016 when the worldwide crude prices were falling. "You looted people over not just last three-and-a-half years but in the last 22 years by not cutting taxes". This effectively means that Indian consumers are paying nearly the same for petrol and diesel when crude was at Dollars 110/barrel.
Because of this move, the state government will suffer a loss of Rs 2,316 crore annually.
The VAT on petrol and diesel would be cut by 1 per cent to give relief to people, said chief minister Virbhadra Singh who presided over the cabinet meeting.
At present, cumulative tax rate on petrol and diesel stands around 99 and 71 percent, which are much above the highest GST slab of 28 percent. Without such a cess, the government will have to take a huge hit on its revenues which could impact infrastructure spending.