Nagpur/Mumbai: Following a diktat from the Central government to reduce state taxes on petrol and diesel, the Maharashtra government slashed the petrol price by Rs2 and diesel by Re1 a litre from Tuesday midnight.
The decision to reduce the value added tax (VAT) on petrol and diesel was taken in state cabinet on Tuesday.
With the central government slashing the excise duty by Rs2 a litre last week and the state govenrnment’s decision to follow suit, the selling price of petrol will be Rs75.58 a litre in Mumbai.
The decision to reduce VAT will result in a loss of Rs3,067 crore a year — Rs940 crore due to loss on petrol, Rs1,075 crore on diesel and Rs1,052 crore on central tax.
The state government levies 25% VAT on petrol in Mumbai, Thane, Navi Mumbai and 26% in the rest of the state and a surcharge of Rs11 a litre across the state. For diesel, the VAT is 21% in Mumbai, Thane and Navi Mumbai and 22% in rest of the state, with a surcharge of Rs2 a litre across the state. The state government earns more than Rs19,000 crore from VAT on diesel and petrol.
Media had reported in its Monday edition about the government’s decision of slashing the VAT on petrol and diesel.
The Centre had reduced its excise duty on petrol and diesel on October 4.