Bihar government today reduced VAT on diesel by two per cent to make it cheaper by 85 paise with effect from midnight, chief minister Nitish Kumar said.
The VAT on diesel has been reduced from the earlier 18 per cent to 16 per cent and in the process the price of the fuel product will become cheaper by 85 paise at Rs 50.15 from midnight, Kumar told reporters after a cabinet meeting.
The diesel price had shot up to Rs 51 per litre in Bihar after the Centre had hiked its price by Rs five last week.
The state government will have to bear a revenue loss of Rs 118 crore during the remainder of this fiscal year on account of reduction in VAT rate on diesel, Kumar said.
On the Centre's directive to Congress-ruled states to provide an additional three subsidised LPG cylinders to consumers, the chief minister said the state governments have intervention in pricing of cooking gas cylinders and the reduction of tax on this product has no effective impact.
The impact on revenue of the Congress-ruled states on bearing burden of subsidies on three LPG cylinders and the state government's capacity to bear the burden on this account will be found out later, he said.