State yet to decide on Centre’s call to reduce VAT on fuel prices | mumbai | Hindustan Times
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State yet to decide on Centre’s call to reduce VAT on fuel prices

mumbai Updated: Jun 26, 2010 02:35 IST
HT Correspondent

You may get some respite from the fuel price hike resulting from the Union Government’s decision to decontrol fuel price if the state reduces Value Added Tax (VAT) on it.

But so far, the state has not taken any call on the Union Petroleum minister Murli Deora’s request to rationalise tax on fuel.

“We have received the request from the Centre. It is yet to formally come before the government for consideration,’’ said finance secretary Vidyadhar Kanade.

Maharashtra currently charges 26 per cent tax on diesel and 26 per cent plus one rupee tax on petrol in Mumbai, Thane and Navi Mumbai. In the rest of the state, the tax stands at 23 per cent on diesel and 25 per cent on petrol. LPG has been completely exempted from tax.

Sources said that the state government is crying foul terming the Centre’s request as unfair. “We have already rationalised our rate of taxation for petrol and diesel. Everytime the Centre hikes prices, we can’t roll back tax. Many states have higher level of taxation so a reduction at this stage seems difficult,’’ said a senior bureaucrat.

The state had reduced the rate of taxation in 2008 following Petroleum ministry’s hike in fuel then at Rs 5 for petrol and Rs 3 for diesel. The tax slab on fuel had also been reduced in 2006. The state’s revenue from fuel stands at estimated Rs 7,000 crore. Prior to 2006, Maharashtra had among the highest taxation rates for fuel ranging at 30-34 per cent.