India to reduce VAT on diesel and kerosene by 2%


Staff member
Mumbai: In a measure of relief to people still reeling from Manmohan Singh's recent increase in fuel price, the Congress-led coalition government on Wednesday decided to reduce the Value Added Tax (VAT) on diesel and kerosene by two per cent.

Diesel prices which will come down by 72 paise per litre and kerosene by 28 paise per litre in Maharashtra, came as a disappointment for consumers.

Apart from reduction in tax on diesel and kerosene, people in the state were expecting cuts on domestic gas cylinders (LPG) similar to a decision taken by the Mamata Banerjee's government which helped people in West Bengal save Rs16 (Dh1.20) per LPG cylinder.

Talking after the weekly state cabinet meeting, chief minister Prithviraj Chavan said the federal government's decision to reduce VAT on diesel and kerosene would result in a loss of Rs4.38 billion to the state exchequer per year.

New rates

Chavan said following the government's move, consumers would be charged 24 per cent VAT on diesel in Mumbai, Navi Mumbai and Thane, while the consumers elsewhere in state would pay 21 per cent.