Maharashtra government to reduce fuel VAT soon?

The Asian Age.

Metros, Mumbai

The state government has been criticised for having the highest taxes.

Sudhir Mungantiwar

Mumbai: After the Centre reduced excise duty on petrol to slash prices by Rs 2, the state government too has indicated that it will reduce VAT on petrol and diesel very soon. After drawing flak for higher petrol prices despite falling international prices, the ruling BJP has gone into firefighting mode, with the state government being asked to reduce VAT on petrol.

Maharashtra has a different level of taxes on petroleum products. The state government has been criticised for having the highest taxes. However, BJP leaders including party state chief Raosaheb Danve, have supported these taxes citing use of revenue for developmental projects. Looking at the backlash over high petrol prices however, the Union government has decided to slash tax on petrol by Rs 1.17. At the same time, the Union finance ministry has asked the state government to reduce taxes.

Maharashtra pockets Rs 7300 crore from petrol taxes and Rs 10,500 crore from diesel taxes. But if the state reduces Rs 1 tax on both petrol and diesel, loss in petrol revenue will be Rs 400 crore while that in diesel revenue will be Rs 1,200 crore. The state government will stand to lose a total Rs 1,600 crore.

Finance minister Sudhir Mungantiwar said, “We will bear the cost of reducing tax. But on the lines of the Union government, we will go for cutting taxes.” After the Centre’s appeal to reduce taxes, the state of Gujarat has reduced taxes by Rs 2.

It will be interesting to see if Maharashtra goes in for a greater reduction than Gujarat.